There is still no new provision of law introduced on the basis of which, with a view to the state of alarm introduced, taxpayers would be “automatically” granted a deferral of their tax payment obligations.
Nevertheless, our legal system – even now, without such new rules – provides certain tax payment facilities that could be used in overcoming the economic difficulties caused by the coronavirus pandemic. The tax authority has an obligation to decide on applications for such payment facilities in an equitable manner, and in the course of this, they take into consideration the specific circumstances of the individual cases and may decide on dispensing with imposing penalties.
In the following, we briefly summarize the payment facilities available to business organizations, in connection with which, however, it is important to emphasize that none of these payment facilities can be applied to taxes and contributions withheld by a payer from natural persons (but they can be applied, for example, to VAT or contributions payable by the employer).
- Deferral and payment in instalments:
The condition of this option is that the non-payment of the tax liability is not caused by a failure of the taxpayer (the coronavirus pandemic constitutes such an objective cause) and that the payment difficulty is temporary only, meaning that the taxpayer will likely be able to pay the tax later.
Upon the taxpayer’s request, the tax authority may grant a deferral or payment in instalments (or a combination of these two, i.e. payment in instalments after a deferral), even without a surcharge in special cases meriting equitable treatment. In other cases, a late payment interest (currently 5.9% per annum) is charged, at least until the date of the decision approving the request. If the tax authority made a positive decision on the request, but did not waive the surcharge, then the latter is charged for the period of the payment facility (from the date of the decision at the first instance), calculated at the base rate of interest in effect at the time when the request was submitted (currently 0.9%).
An important exception is that deferral and payment in instalments is not available for taxpayers in a VAT group or for withheld taxes.
- Tax reduction and tax cancellation:
The condition of the above is the impossibility of conducting the business operations. In case of business associations, these can only be allowed for actual (expired, unpaid) debts of surcharges or penalties. The tax authority may make any reduction contingent upon the payment of a part or the whole of the tax debt.
An important exception is that the actual amount of the tax (principal debt) can only be reduced (or cancelled) in case of private individuals. Further, tax reduction may not be granted to taxpayers participating in a VAT or corporate income tax group arrangement.
- Reduction of tax advance:
A reduction may be requested for the advance payments of corporate income tax, innovation contribution, the income tax of energy companies, and the small business tax (KIVA), in case the forecasts of the business indicate that with the decrease of revenues the tax liability in the given tax year will also decrease. It should be noted that in such cases, the request may only be submitted until the due date of the tax advance, but the procedure itself is duty exempt.
- The automatic payment facility for qualified taxpayers:
An automatic payment facility for up to 12 months may be granted for tax debts not exceeding HUF 1.5 million without examining the circumstances once a year. Such requests are exempted from duty.
Procedures for granting payment facilities are started at the request of the taxpayer; with the exception of sole traders and the cases listed above, the duty is HUF 10,000. In case of reliable taxpayers, requests for payment facilities and tax reductions are evaluated and decided upon by the tax authority is an expedited procedure, if requested.We recommend the use of the above options to our Clients.
Do not hesitate to contact us in case of any questions that may arise, as well as with any assistance necessary with your requests.