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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.

Employees who have coronavirus tests paid for by their employer will not have to pay tax on them. The Hungarian tax authority published its official guidelines with regards the tax treatment of COVID tests.

The Architectural Copyright Register was started at the very beginning of January 2020, and is intended to contain information about the copyright related to architectural and technical design documentations and the buildings and structures realized based on them.

At the beginning of July 2020, the act on the termination of the undivided joint ownership on lands and the clarification of the data of the rightholders of properties deemed agricultural land in the land registry was published and will enter into force on 1 January 2021.

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”.

The amendments to the Hungarian Bankruptcy Act enter into force on 1 August 2020, aiming at modernizing the rules of the insolvency law, maintaining employment and facilitating the agreement between the creditors and the debtor in the course of the bankruptcy and liquidation proceedings.

Since the state of emergency was terminated on 18 June 2020, the special employment law provisions introduced due to the coronavirus pandemic are no longer applicable. In particular, the employer is no longer entitled to unilaterally request the employee to work from home.

Fixed-Rate Tax of Low Tax-Bracket Enterprises (acronym in Hungarian: KATA) has become widely popular since its introduction in 2013 due to its beneficial tax rate and simple administration. By the end of 2019, 377 thousand entrepreneurs opted for this taxation mode, however, according to the Ministry of Finance, 40% of those switched previous employment status to KATA taxation. Since KATA was introduced to support micro enterprises and not to be an alternative to employment, the Ministry of Finance is set to act against this trend.

The Hungarian Parliament is discussing a proposal on the amendment of the Act on Electronic Communications in order to implement the regulations of EU Directive 2018/1972. This latter Directive was adopted by the European Union in December 2018 to set up the European Electronic Communications Code. Member Sates shall implement its regulations until 21 December 2020 after a 2-year long preparation period.

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KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

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