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The income related tax changes in 2019: the new type of social contribution tax (SZOCHO)

Employment, labour law, Medium-sized companies, News, Start-ups / / , ,

The Act LII of 2018 on the social contribution tax was published on 31 July, 2018 and it will significantly increase the tax items payable after the wages and other incomes from January 1, 2019.
The termination of healthcare contribution (EHO) and SZOCHO with the rate of 19.5% on income instead of EHO are considered to be significant changes of the new regulation.

The new provisions clearly increase the dues of the employers, e.g. increasing tax rate after the fringe (non-wage) benefits, increase of tax base for calculating and the tax rate in case of dividend income, and the significant reduction of tax reliefs. Therefore during planning of wages for the next year, the following new rules shall be considered.

In case of the income withdrawn from the business account, dividend income, entrepreneurial dividend fund, capital gains income, the maximum amount of SZOCHO shall be increased to19,5 percent of twenty-four times of the minimum wage, which shall be HUF 645.000, – calculating with the minimal wage in the present year – from the current amount of HUF 450.000. In addition, the base of SZOCHO payable after the insured member of general partnership, limited partnership and limited liability company shall be 112,5 percent of the minimum wage.

Generally the pay office/employer shall pay SZOCHO, however in some special case the private person earning the income shall pay the SZOCHO. There are special legal provisions regarding assignment, temporary agency work and employment relationship established by more than one employer.

Abolished tax reliefs

– tax relief for young employees under 25 years and employees over 55;
– tax relief for participants in Karrier Híd Program;
– tax relief for research and development activity;
– tax relief enforceable by the employer employing doctoral candidate employees or students participating doctoral education determining by the Act CCIV of 2011 on the national higher education;
– tax relief for permanent job-seekers;
– tax relief in connection with the payment of child care allowance and benefit.

Please note that the tax relief which may be claimed for definite period of time shall not be ceased automatically by 1 January, 2019. These may be obtained during the entire validity period.

The following group of people will be entitled to tax reliefs from the next year:

– the unskilled workers and employees in agricultural positions;
– people who have been out of job for a particular period of time;
– woman nursing three or more children,
– disabled employees,
– workfare workers.

Only one type of tax relief shall be claimed regarding any employee at the same time. In case of eligibility for more tax reliefs, the employer may decide, which tax relief to claim.

About the labour law related changes in 2019: the cafeteria allowances and the taxes of the retired employee’s salary

Employment, labour law, Medium-sized companies, News, Start-ups / / , , ,

The Act XLI of 2018 on the alteration of the tax law and other related acts, furthermore on the super-tax of immigration was published on 26 July, 2018 and it will significantly amend the system of the cafeteria allowances and makes the employment of the retired persons more favourable from the next year.

We summarize the essence of the changes as follows:

– only the so called “Széchenyi Pihenőkártya” (SZÉP Card) will remain in the favourable tax category (34,5% in the next year) with a frame of HUF 450.000.-/year;
– the following allowances fall under the tax category of 40,71% in the next year: SZÉP Card over the frame detailed above; gift voucher once a year, up to max. 10 % of the wage minimum;
– all other allowances will be calculated based on the general rules, with the general tax rate as salary in the next year.

What to do in connection with the above mentioned changes:
– review of the cafeteria policy;
– review and appropriate amendment of the documents containing the cafeteria allowances (employment contracts, information letters).

In the next year in case of pensioners employed under the Labor Code no social contribution and social contribution tax (szocho) have to be paid. With regard to that the pensioners (falling into the above mentioned category) will be not entitled to social security allowances.

Changes of Companies Act effective as of 1 July 2018

Company groups, Corporate law, Medium-sized companies, News, Start-ups / / , , ,

On 1 July 2018 entered into force the modification of Act V of 2006 on Companies Registration and Winding-up Proceedings amending the rules of winding-up, especially the simplified procedure, the statutory supervisory procedures and also makes possible to file with the court application for the registration of changes prior to the effective date.


Preliminary request for the registration of changes
The request for registration of a (future) change can be submitted in advance so even before the effective date of change. Nevertheless, the preliminary request for registration of future company change cannot be submitted within more than 30 days prior to the date of change.

Executives without right of representation
It is also mandatory to register those company executives who do not have right of representation for the company. This amendment concerns in particular companies where the management is constituted by a board of directors where not all directors have right of representation for the company.

Legal supervisory procedure
Any person claiming to have a legal interest in starting a legal supervisory procedure against a company may only start a legal supervisory procedure in its own name as applicant therefore no name application is not possible.

Winding-up, simplified winding-up procedure
Any company form (this including private limited companies (in Hungarian “Zrt”) and limited liability companies (in Hungarian “Kft.”) may choose to terminate itself by simplified winding-up procedure, provided that is not subject to mandatory audit. In the case of simplified winding-up, no administrator is required to be appointed, the administrator’s duties are performed by the company’s executives (i.e. managing directors). The simplified winding-up procedure shall be at first reported to the Hungary Tax Authority who shall automatically inform the company court that shall publish a notice thereof in the Company Gazette.

The labour law related changes in 2018

Employment, labour law, Medium-sized companies, News, Start-ups / / , , , , , , ,

A summary regarding the labour law related changes in  2018 – mandatory minimum wage, social contribution tax, healthcare contribution, simplified contribution to public revenues, childcare benefits, sick pay, cafeteria rules, statutory retirement age

The labour law related changes in 2018

Government Decree No 430/2016. (XII. 15.) determines the amount of the mandatory minimum wage. The mandatory minimum wage for full-time employees increased with 8% as of 1st January 2018, from 127,500 to gross 138,000 HUF. The guaranteed minimum wage paid to skilled workers rose by 12% in the case of completion of full time working as of 1st January 2018, from 161,000 to 180,500 HUF. The social contribution tax (SZOCHO) and the amount of the healthcare contribution (EHO) reduced from 22% to 19,5%. The simplified contribution to public revenues (EKHO) also decreased, the employer shall pay 19,5% EKHO instead of the previous 20%.  

Due to the increasing minimum wage the amount of the childcare benefits (GYED), the benefits for university students and graduates grew as well as the sick pay as of 1st January 2018. The eligible families are entitled to a maximum of 193,200 HUF in childcare benefits. Students enrolled in a bachelor’s program will be eligible for 96,600 HUF support and students enrolled in a master’s program for 126,350 HUF. Female university students or graduates are eligible for an extra year of child support up to the child’s second birthday. Moreover, fathers also eligible to claim baby-care allowance (CSED) in more cases from 1st January 2018. The daily maximum of sick pay increased from 8500 HUF to 9180 HUF.   

In addition to the above, the cafeteria rules have changed. New cafeteria element: a student loan reimbursement as employer benefit can be provided tax free up to the installments but not more than 27,600 HUF monthly. The conditions for a tax free housing allowance eased, the ceiling price of this benefit became higher (nearly 83,000 HUF). The burden on employers reduced from 43,66% to 40,71% in case of certain specific benefits (Erzsébet vouchers, hot meals at the work place, monthly public transport ticket, school starting support, contribution to a voluntary health fund/pension fund). The costs of cafeteria cash payment and benefits may be granted as Széchenyi Recreation Card („SZÉP” Card: accommodation, catering, leisure) remained the same 34,22%, if it does not exceed 450,000 HUF. 

The statutory retirement age increased to 63,5 year and the amount of pensions amended favorably. The pensions (including among others retirement pension, widows’ pension, orphans’ allowance etc.) increased with 3% with the effective date of 1st January 2018. The amount of minimum pension remained unchanged (28,500 HUF).

 

About the changes of Government Decree 235 of 2009 (X.20.)

Medium-sized companies, News, Start-ups, Trade affairs / / , ,

In September 2017 Government Decree 250 of 2017. (IX.5.) entered into force, modifying certain healthcare, health insurance and pharmaceutics related government decrees.
On 7 September 2017 Government Decree 250 of 2017. (IX.5.) regarding the modification of certain healthcare, health insurance and pharmaceutics related government decrees entered into force, hereby modifying the Government Decree 235 of 2009. (X.20.) („Government Decree”) regarding the rules of the authorization procedure of medical research, clinical trials of products intended for human use, as well as the clinical trials of medical devices for human use, intended for clinical trials.

The changes of the Government Decree entering into force on 1 January 2018 concern the modification of the research and examination project. In the Hungarian text a slight difference can be found in the wording between the previous version and the one entering into force.

As a new provision entering into force on 1 February 2018 the Government Decree regulates the authorization of research involving ionizing radiation, the serves compliance with EU legal acts (Euratom).

About the changes of seat services

Corporate law, Medium-sized companies, News, Start-ups / / , ,

Regulation No. 7/2017 (1 June) of the Ministry of Justice about registered seat services entered into force on 1 July 2017 in connection with the amendment of the Companies Act which set out among others the following important regulations:
The agreement shall be in writing between the principal (company) and the agent who provides the seat service.

The agreement shall not be a fixed-term contract only if the company was established for a fixed period of time. The right to terminate shall not be exercised during the first year after the conclusion of the contract.

Only those properties may be used as the seat of a company which are exclusively owned by the agent who provides the seat service or for which the provider’s user rights have been registered at the Land Registry.

The agent shall ensure that the mails addressed to the company are taken over at the registered seat and shall also notify the company on that fact within one working day after the receipt of any mail.

The Regulation No. 9/2017. (VII. 18.) of the Ministry of Justice on the amendment of the above Regulation was published on 19 July 2017 and entered into force on the day following its publication in which the most important changes are the following:

The agent shall be entitled to provide seat service if the owner of the property gave prior written consent to providing seat and one of the following conditions is fulfilled:
a) the parties are affiliated companies or companies linked by virtue of participating interests under the Accounting Act,
b) the agent is registered in the Trade Registry as the company’s delivery agent, or
c) further from providing registered seat for the company there is a civil law relationship between the parties for providing long-term accounting services.

The parties shall harmonize their existing agreements for providing seat with the new regulations until 30 June 2018, the latest, and if there was not any written agreement between them, such contracts have to be put in writing.

The existing agreements for registered seat services shall be ineffective on the following day the above deadline (i.e. 30 June 2018) if the contract does not correspond to the aforementioned new regulations.

Modifications in corporate law

Corporate law, Medium-sized companies, News, Start-ups / / ,

In July 2017, modifications were carried out in acts of Public Company Information, Company Registration and Winding-up Proceedings.

According to the Act V of 2006 on Public Company Information, Company Registration and Winding-up Proceedings („Ctv.”) modification made in June 2017 the National System of Company Information and Company Registration (Company Information Service) will be responsible for providing access to the Business Registers Interconnection System (BRIS) by linking the national central registers, commercial registers and business registers.

By connecting the European countries’ company registers, certain data, the consolidated articles of associations, annual reports of the limited liability companies, corporations and European corporations will be available in BRIS which system is operated by the European Commission. The basic data can be accessed free of charge, in other cases the data can be obtained against payment of an administrative fee.

The National Authority for Data Protection and Freedom of Information regulates “cookies”

Company groups, Data protection, Medium-sized companies, News, Start-ups / / , , , ,

The National Authority for Data Protection and Freedom of Information published a notice about the data protection requirements of “cookies” this February.
The National Authority for Data Protection and Freedom of Information in its February announcement summarised the experiences on the data protection requirements of the “cookies” used by webshops, with a clear intention to create a legitimate and coherent practice.

The Authority draws attention to the fact that the at the same time, on 25 May 2018, both the new regulations on the general data protection and the new electronic communication regulation will enter into force, and the latter will regulate and standardise the cookies in the European Union.

The publication pointed out that to the direct marketing newsletters (DM Letters) not only the Law on Advertising and the Electronic Commerce Act shall be applied, but the Data Protection Law as well.

Amendment of the Code of Civil Procedure

Dispute resolution, representation, Medium-sized companies, News, Start-ups / / , ,

According to the amendment of the Code of Civil Procedure from the 1st of July 2016 for companies with an inland seat have to submit all submissions to the court electronically, and if the company is a defendant in a procedure, the court will also electronically deliver all documents, except the application which is delivered in paper format.

In order to be able to comply with the new rules, a sufficient technical infrastructure has to be granted either by the company or by its legal representative, including the so called “ÁNYK” program, the “process gate” and the electronic signature. Further to this, the parties have to preserve all electronic documents. In case the digitalization of a large amount of the evidences would entail disproportionate difficulties, it will be possible to present the evidences in paper format.


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