Due to the extended economic effects of the coronavirus epidemic, the October tax package announced by the Hungarian Government was aimed to stimulate the investing climate. According to the Hungarian ‘economic protection operational body’, there are three different ways to revive the economy (i.e.: tax reduction, simplification of the administration, boosting investments).
At the beginning of October 2020, the prime minister has announced that the Hungarian Government continues the family protection measures and for this purpose, the VAT tax rate of new flats will be again 5% instead of the general VAT rate of 27% in case of constructions commenced until 31 December 2022.
Economic recovery in Budapest (and Hungary) is predicted to follow an elongated L-shape curve, meaning that the effects of the pandemic are to be present and felt until at least 2023. As a kind of crisis management contribution by the sectors that were less affected by the pandemic, companies operating in these sectors would be expected to be temporarily more involved in public burden-bearing to alleviate the negative economic effects of COVID-19 in Budapest.
At the time of the COVID-19 pandemic, remote working became the “new normal” in many industries: large numbers of people who had previously worked and commuted across the border within the EU or Switzerland, had been forced to work from home. Telecommuting, however, worked out so well that most people would want to continue in this way. However, in terms of taxation, this can put them on thin ice, and not just them, but the companies employing these workers.
The extended deadline for implementing Strong Customer Authentication (“SCA”) expires on 31 December 2020. Originally, Hungarian laws prescribed 14 September 2019 as a deadline for the implementation of the new SCA, however, in parallel with the decision of the European Banking Authority, a new deadline has been set to 31 December 2020 by the Hungarian National Bank.
The coronavirus pandemic has an unprecedented effect on economy on a global level. Similarly to central European countries, the special situation caused by COVID-19 had an adverse effect on the performance of most branches of the national economy in Hungary as well. The Hungarian GDP declined with a historical 13.6% in the third quarter of 2020 compared to the same period of 2019.
The COVID-19 pandemic and the physical distancing measures force many employers to introduce telework (working from home) on a large scale. In order to respond the current challenges, in September 2020 the Hungarian Government set the objective to reform the regulations on teleworking. The purpose of the new rules is to allow more employers to introduce telework and also to make the regulation more flexible.
On 1 September 2020, a new government decree entered into force on travel restrictions during the pandemic period. Based on the new rules, Hungarian citizens arriving from abroad may get through a health inspection and in case of suspicion of contamination, the Hungarian citizen must be placed in quarantine. In case the suspicion of contamination has not been established by the health inspection, the Hungarian citizen also must be placed in official home quarantine or in quarantine determined by the pandemic authority for 14 days. In certain circumstances, the Hungarian citizen may be exempted from this quarantine obligation, if he/she arrives from the Czech Republic, the Slovak Republic or the Republic of Poland.
As of 1 January 2021, retailers are required to allow the so-called electronic payments, which means that customers will be able to pay for the products and services by credit or debit cards, mobile phones or instant payments instead of cash. This change would not only be more comfortable for customers, but also it may be an effective solution against black market.
The European Court of Justice's judgment in Schrems II case published on 16 July, 2020 founded the Privacy Shield Decision invalid. The judgement also stated that the Commission Decision on Standard Contractual Clauses for the transfer of personal data to processors established in third countries remain valid.
The Hungarian Parliament passed a new act on 14 July 2020 to regulate the short-term housing market (Airbnb services). The new legislation delegates a regulating tool to the local municipalities, so that they can decide on the conditions (especially the maximum renting period), under which a flat can be rented for short term. The new law only gives a regulatory framework for the local municipalities and the Hungarian Government; specific rules are yet unknown as they have to be made from 1 August 2020. According to press releases, some of the mayors are planning to maximize the number of days for Airbnb and other similar services and would prescribe that at least half of these “allowed” days should fall between June and August.
On 24 June 2020 the European Council amended Directive 2011/16/EU, in order to defer certain deadlines for filing and exchanging information under the Directive on Administrative Cooperation (“DAC”). The postponement is justified by the difficulties Member States and businesses are facing with during the pandemic.
The Hungarian Parliament passed a legislation on the ban of single-use plastic in Hungary on 7 July 2020 as part of the Climate and Nature Protection Action Plan. The legislation was meant to be accepted earlier this year, however then the proposal was withdrew because of the COVID-19 pandemic. According to an earlier press release from the Ministry for Innovation and Technology, the “Hungarian Government is committed to defend the created world”.