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Trade affairs

Sustainability reporting obligations




After a long period of time based on the warning signs of the environment, we may have come to realize at an individual level that the existence of the natural conditions around us is not self-evident. It is clear that rampant exploitation has serious natural consequences, and that our daily lives cannot be continued in their present form for long, as they are not sustainable. There are many national and international efforts to protect the environment, as well as awareness and willingness to act at an individual level is growing. Of course, enterprises are not to be left out of this list, as their importance is demonstrated by the fact that the revenue generated by some group of companies can rival the GDP of certain countries.

There is no requirement for companies to report on sustainability in a similar way to accounting reporting. Nevertheless, we see that more and more companies have some form of corporate social responsibility. One example is the widespread use of CSR (Corporate Social Responsibility). In order to make this commitment conscious, transparent and accountable, the European Commission presented a proposal in April 2021 (hereinafter: “Proposal”) to amend corporate sustainability reporting.

New Proposal

The Proposal seeks to reform the Non-Financial Reporting Directive (NFRD), which amends the Accounting Directive. The main objective is to require companies to report in a similar way to accounting reports. The Proposal would change the current system of voluntary commitments and obligations under the NFRD, which only affects a limited number of companies, as follows.

According to the plan the reporting obligations would affect approximately 30% more persons concerned and the known text also specifies in more detail the subject matter and the method of providing information.

The report should be presented in a standardized electronic format, ensuring quick and easy access, same file format, comparability and paperlessness.

One of the most important innovations of the Proposal is that it requires reporting according to uniform standards. This is of particular importance as it will allow companies’ reports to be retrieved chronologically and to be comparable with those of their competitors.

Another innovation is that the content of the report will also be subject to appropriate auditing to ensure its independent and objective validation.


Although the Proposal is still pending adoption and would only be phased in over a number of years, its practical implementation is of paramount importance. It gives cause for optimism that it will take corporate social responsibility for our environment to a new level. It will undoubtedly impose a significant additional burden on those concerned in the beginning, however it is in the interest of all of us in the long term.

Sustainability expectations will be transparent for companies that they need to meet. Another benefit is that companies will be able to benchmark themselves against their competitors on the basis of harmonized reporting standards. And those that have already committed to sustainability will be able to reduce the unfair advantage of their exploitative peers and even gain a competitive advantage. All of this suggests that there are many benefits to be gained from fulfilling reporting requirements, in addition to compliance, so it is worth making a gradual and conscious effort to prepare starting from now.

Should you have any questions regarding the above, feel free to contact us.

CLV Partners contact us


New COVID-19 restrictions in Hungary: consequences for employers

The restrictions (of Gov. Decree 484/2020 (XI. 10.)) apply as of 11 November 2020 for the whole of Hungary, effective until 11 December 2020. These restrictions may be prolonged if necessary.
The current rules concerning wearing masks, social distancing and border crossing remain in effect, while wearing masks is now obligatory in public spaces designated by the local councils in cities exceeding 10,000 inhabitants.

I. Curfew between 20:00 and 5:00 with an exemption regarding going to work

During the curfew, only people going from their homes (place of residence) to work and back home from work can be in public spaces. A sample of the certificate to be issued by the employers can be found on the Government website:

II. Rules regarding education

Nurseries, kindergartens and primary schools remain open for those under 14 years of age. Online education has been introduced from grade 9 in middle schools and colleges/universities, and dormitories are closed.

III. General ban on events

All events are banned. This also applies to all professional events held in person (conferences, workshops, etc.).

IV. Restrictions on trade and catering

Restaurants are closed and only takeaway and home delivery are allowed, however, factory canteens may remain open. Shops, stores and other services except for pharmacies and petrol stations must close at 19:00, after which only those working there may stay on site. Hotels may only accommodate guests arriving on business, economic or education purposes.

V. Sanctions

In the event of violation of the rules applicable to events or institutions, shops and facilities, the police may close the area, premises or institution (except for educational institutions) for a period of one day to one year and impose a fine of HUF 100,000 to HUF 1,000,000.

VI. Economic protection measures

In order to protect jobs, the Government has also introduced economic protection measures (Decree no. 485/2020. (XI. 10.)), as follows.

1. Tax allowance
For November 2020 employers operating in the scope of activity listed in the Decree shall not need to pay social contributions and vocational training contributions. Small entrepreneurs within the scope of activity listed in the Decree do not need to count personal payments to their small business tax base relating to employees who would have been dismissed due to the state of emergency, provided that these employees are not dismissed and receive their salaries.

2. Provision for hotels
The state will reimburse 80% of the price (net income) of bookings booked for within the next 30 days and received by the hotels registered in the National Tourism Data Providing Centre (Nemzeti Turisztikai Adatszolgáltató Központ) until 8 November 2020, provided that the hotel employees are not dismissed and receive their salaries.

3. Wage subsidies
50% of the wages for November 2020 of the employees of restaurants and leisure facilities listed in the Decree will be reimbursed by the state in the form of a subsidy, provided that the employees are not dismissed and receive their salaries.

The ‘actual main activity’ is the activity which generated the most revenue, which must be at least 30% of the revenue in the previous six months.

There are still many open questions regarding the implementation of the governmental measures described above, we shall provide information on possible further measures after they have been published.


Certain Tax and Corporate Deadline and Processes

During the state of emergency and the implemented partial curfew, the continuous decision-making of companies could easily become impossible. In order to prevent this, as of 11 April 2020 different rules apply to the decision-making process of the obstructed companies, and the mandate term of certain company officers is also extended for this period.

By definition, the decision-making rules do not apply to companies not obstructed by the exceptional circumstances, for example in the case sole member companies.

During the emergency and until the 90th day after its end, the term of managing directors, board members (e.g. supervisory board members) and auditor may not be terminated as a result of expiration or resignation and these officers shall continue to carry out their duties during this time. This provision also applies to unhindered companies, but of course it is also possible to elect new officers during the state of emergency.

A new rule to be applied to all taxpayers is that the deadline for preparing, disclosing, depositing, publishing and submitting financial statements of the Accounting Act due after 22 April 2020 is extended until 30 September 2020. In the case of the main types of tax (corporate and dividend tax, small business tax, local business tax, etc.), the tax assessment, declaration and payment obligations, as well as the tax advance assessment and declaration obligation to be fulfilled simultaneously with the annual tax returns can also be fulfilled by this extended deadline.


The right of exit and of entry following Brexit

The United Kingdom is set to leave the European Union on 31 January 2020. As the date draws ever so close, it is time to get acquainted with the rules to follow the departure of the country, most importantly the right of exit and of entry of union citizens.
Presently, union citizens can enter the UK with both their national identity cards or their passports and they do not need a visa to do so. Although 31 January 2020 is the day the UK shall officially leave the EU, it will be followed by a transition period, in which the rules of entry and exit shall remain unchanged.

According to the agreement between the UK and the EU, this transition period ends on 31 December 2020. The Joint Committee (comprising representatives of the EU and UK) may extend this transition period one time with an additional 1 or 2 years. As a result, the current system could hold out as late as 2022, but for now 31 December 2020 shall be deemed the relevant date.

Come 1 January 2021, – assuming no extension takes place – it will be entirely up to the British Parliament to determine the conditions of entry and exit into the country, specifically whether or not a passport and/ or visa is required.


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

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).


Changes in the enviromental taxes

The amendments of the Act No LXXXV. of 2011 on the environmental product tax. The regulation of the environmental product tax has been amended with effect from 2016. In this newsletter we would like to draw the attention to the main changes as follows:

1. Payment obligation of the environmental product tax:
a) Inventory purchase: According to the latest amendments to the act on the environmental product tax, the payment of the environmental product tax is mandatory not only in case of placing on the market or using for own purpose such products, but also in case of purchasing them for inventory, if the obliged person chooses the date of the purchasing for inventory as the date when his payment obligation arises, and he notifies the tax authority within 15 calendar days from the beginning of the activity or in case of continuous function until 31 of January of the current year, about his choice.

b) Packaging waste: The range of the obliged persons has also been extended. Thus, the person who puts the packaging material which has been produced abroad on the Hungarian market at the first time, and the first inland holder of the packaging waste formed from the unwrapped packaging, will be also obliged to pay the environmental product tax. The latter provision will be notable especially for logistic centres.

c) So-called triangle transactions: In accordance with the amendment, an obligation for paying environmental product tax does not arise in case of selling an environmental product to an inland purchaser, if after that the product will be delivered or dispatched abroad. The condition of this was previously that the seller himself had to deliver or dispatch the product.

2. Default surcharge:
The default surcharge has been implemented in the act as a new provision, which has to be calculated on the basis of the provisions of the act on the taxation in case of late payment or incomplete payment of the environmental product tax. Also, in case of undue use of budget supports a default surcharge has to be paid after the amount and period defined in the act.

3. Definitions:
The amendments affected the definitions of the act as well. Definitions such as packaging, commercial packaging, commercial packaging material, flat rate of product tax (among others) have been supplemented. Further, the range of the definitions has also been extended with the terms element of the packaging, component of the packaging, part of the packaging, packaging waste, building product,  motor vehicle, craft products, crafting activity, large industrial tool, deficit of the product tax, margin of the product tax, product tax debt, tariff heading.

4. Others:
Further to the above, the detailed rules regarding the flat rate of the product tax, the measure of the efficiency of waste management, product tax recovery and the product tax penalty have been clarified by the latest amendment.

Should you have any further questions in relation to the above, please feel free to contact us:

Dr. Marianna CSABAI and Dr. Réka SÜTŐ
H-1126 Budapest, Tartsay Vilmos u. 3.
Tel: + 36 1 488 7008
Fax: + 36 1 488 7009



On 1 November 2015 the new Hungarian Act CXLIII of 2015 on the Public Procurement has entered into force

The new Hungarian Act CXLIII of 2015 on the Public Procurement has entered into force. The new Act implements and harmonise the national public procurement rules with EU public procurement directives. To all public procurement initiated after 1 November 2015 the new rules shall be applied.


Should you have any questions regarding the above, please feel free to contact us.
Dr. Marianna Csabai
H-1126 Budapest, Tartsay Vilmos u. 3.
Tel: + 36 1 488 7008
Fax: + 36 1 488 7009


Recent tax changes from labour law perspective

As result of the tax changes adopted at the end of last year, new tax regulations have entered into force as of 1 January 2015. The aim of this newsletter is to provide you with a brief introduction of these changes which may affect both employers and employees as well.

Tax burden of fringe benefits and of certain specific benefits
The scope of the fringe benefits that may be given to employees under the provisions of the Hungarian Personal Income Tax Act (“PIT Act”) has remained unchanged, but the annual limit of the fringe benefits subject to a preferential tax burden (35, 7%) has been decreased compared to annual limit applicable in 2014, from HUF 500 000 to HUF 200 000/ year.

As a consequence of the above, from January 1, 2015 the tax burden of the fringe benefits not exceeding the value of HUF 200 000 will remain unchanged (i.e. the value of the benefit multiplied with 1,19, after which 16% personal income tax and 14% healthcare contribution shall be paid, amounting in an overall 35,7% tax burden). The benefits provided in excess of the above value, according to the PIT Act shall qualify as certain specific benefits subject to a higher tax burden of 51,17% (i.e. the value of the benefit multiplied with 1,19 after which 16% personal income tax and 27% healthcare contribution shall be paid).

As an exception to the above, the law provides that in respect of the money allowances provided by the employer on Recreational Card (in Hungarian: „SZÉP kártya”) – the preferential tax burden rate of 35,7% shall continue to be applied even if such value exceeds the value of HUF 200 000 but remains under the limit of HUF 450 000, the latter defined as the annual recreational limit.

It is worth mentioning that in order to fall within the scope of the preferential tax burden rate (35,7%) a combination of fringe benefits and allowances given on Recreational Card is also an option in the sense that the employer may provide fringe benefits within a value of maximum HUF 200 000 plus further allowances may be allocated on Recreational Card for a further amount of HUF 250 000 (without exceeding the annual recreational limit defined above).

The new tax regulation also clarifies that students employed via school cooperations, shall be entitled to fringe benefits falling under the scope of the PIT Act under the same conditions as the employees employed by the employers who are hiring students as well.

Family allowances and tax allowances to first married couples
In 2015 the amount of family allowances introduced in the previous years, will remain the same, thus the allowances per one dependent shall amount up to HUF 62500, and in case of three of more dependents shall amount up to HUF 206 500, nevertheless the law provides that, from 2016 the amount of the family allowances granted for families with two dependents shall increase gradually within the consecutive four calendar years up to HUF 125 000.

Additionally, in the frame of the newly introduced changes, the category of persons entitled to family allowances and the category of persons receiving such tax statements has been also expanded, and further administrative requirements have been introduced in the sense that if parents will wish to take in advantage of such allowances, when completing their tax statement for 2015 shall also indicate the tax number of the dependents, as for the future the indication of other personal data (such as name, mother’s maiden name, address, place and date of birth) shall not be sufficient. Thus parents will be required to submit a request to the tax authority for obtaining a tax number for their dependants, if the dependants do not have a tax number.

Pursuant to the provisions of the PIT Act, as from January 1, 2015 every paying agent although not qualifying as employer who shall provide regular income to employees (especially monthly or weekly salary, service fee, royalty, compensation for personal contribution, other allowances) shall be obliged to assess the amount of the monthly family allowance. Thus a Principal /Assignor paying a regular monthly fee to the Agent/ Assignee on a contractual basis shall also be regarded as a paying agent.

A new category of tax allowances has also been introduced, for which first married couples are eligible who got married after December 31, 2014, provided that at least one of the spouses has its first marriage.

The above tax allowance may be used prior the use of family allowances, by which the first married couples may reduce their payable tax with an amount of HUF 5000 (reflected on a tax base level this means that the overall income could be this decreased with a total amount of HUF 31250.

First married couples are eligible for the tax allowance as from the first month following the month in which they got married for a duration of maximum 24 months, but not later than the month from which the eligibility for family tax allowance has arisen. If within the period of 24 months the marriage breaks up, the tax allowance shall no longer apply.

The couple may take advantage of the above tax allowance either by sharing it, or individually (just one of them). As a precondition for obtaining such tax allowance a joint tax declaration of the couples shall be required, by indicating the tax numbers of the spouses. clearly specifying which one of them will take advantage of the tax allowance as well as their decision on sharing such tax allowance.

Travel orders issued under the PIT Act
The definition of travel orders has also been changed, according to which beside the previously used paper-based travel orders, from now on electronic travel orders processed and stored under the conditions required by law, or any electronic supporting document relating hereto shall also be accepted.

Temporary agency workers
Within the meaning or article 24 subsection 3 of the PIT Act, as from January 1, 2015 for the case when temporary employee are employed in Hungary via a foreign temporary agency, the acquiring Hungarian company may act as employer in respect of the income provided to the temporary employee, thus the law provides for the possibility that the tax obligations regarding the assessment and declaration of personal income tax may be fulfilled by the Hungarian acquiring company.


This article contains only general information, thus by its nature it shall not constitute as legal advice nor a substitute for and the information provided herein may not be regarded as complete.

Should you have further queries CLV Partners is ready to answer your questions.

Dr. Marianna Csabai
Dr. Antónia Zsigmond

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