Background information

Under §.3. - §.5. of the government decree 47/2020. (III. 18.) a selected group of businesses will receive relief from certain types of taxes in the months of March-June 2020. The reason for the measure is specified in the title of the decree: “immediate measures necessary to alleviate the impacts of the coronavirus pandemic on the national economy.” The main target is to help employees working in sectors that are hard-hit by the pandemic.

Content of measure

Businesses eligible are those active in the following sectors: tourism, catering, entertainment, gambling, film industry, live performance, event organiser and sports activities and passenger land transport services (taxi services). Self-employed and microcompanies paying the KATA flat tax for small entrepreneurs will be exempt from the tax in the period of March to June 2020. The KATA tax includes social insurance tax, and the entrepreneurs choosing to get this assistance can still stay insured. In addition, a freeze will be applied to any KATA arrears accumulated before 1 March 2020 until the end of the 'state of emergency' announced by the government on 11 March. 82,000 KATA-registered businesses paying HUF 25,000, 50,000 or 75,000 per month (depending on what category they are in) may be recipients of the tax relief. A rough cost estimate: HUF 12 billion in total if most entrepreneurs take advantage of the measure.

Use of measure

This is an automatic measure, so the 81,000 KATA registered entrepreneurs will be exempt from the tax for the designated months. After the circle of sectors was extended, the relief affects about 120,000 solo entrepreneurs in 2021. The only alternative is to suspend business activities even beyond the period of the tax relief, as when suspended, no taxes are due.

Target groups

Workers	Businesses	Citizens
Self-employed	Sector specific set of companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government Company / Companies	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

The Music Hungary Association, an umbrella organisation for the music sector, lobbied the Finance Ministry for re-introducing KATA relief in November 2020, as lockdowns deeply affected the music sector. In its answer in January 2021 the Finance Ministry suggested that musicians suspend their business activities for the time when no concerts can be held. KATA is generally chosen by small entrepreneurs or freelancers (40% of KATA-registered businesses earned below HUF 4 million or €11,000 a year from their activities in 2019) so their representation in social dialogue is especially weak.

Views and reactions

The journalists' association MÚOSZ demanded that journalists and photographers are included in the circle of activities where the relief from KATA payments applies.

Sectors and occupations

This case is not occupation-specific.

Sources

• 18 March 2020: Government decree 47/2020 (EN)
• 23 March 2020: Government decree 61/2020 (EN)
• 24 March 2020: Details of the new economic package published (index.hu)
• 24 March 2020: MÚOSZ: Journalists, photographers should get KATA relief (media1.hu)
• 10 November 2020: Government decree 485/2020 (English)