The rule introduced earlier in the 2021 tax year can be still applied in tax year 2022, according to which the local business tax rate is a maximum of 1 percent for an entrepreneur who qualifies as a micro, small and medium-sized enterprise by virtue of having a net sales revenue or total assets of no more than HUF 4 billion (and the conditions for qualification as an SME under separate legislation are also met), if the tax rate according to the municipal decree is higher.

It is sufficient if any of the above thresholds for net sales revenue or total assets are met, so for example if the sales revenue exceeded the threshold but the total assets did not, the taxpayer will still be entitled to apply the reduced tax rate. With regard to other data, the provisions of the Act on SME should be applied. Not only does it follow from this, for example, that Act on SME remains relevant for headcount data, but also the fact that a taxpayer loses or gains the status of being a medium, small or micro-entrepreneur if he exceeds or falls short of the given thresholds in two consecutive financial years. If he has already exceeded the threshold in 2021 (which he learns about from the financial statement prepared in May 2022), he will still be classified as an SME, he will be entitled to apply the reduced local business tax rate, and he will only be out of the SME circle if he also exceeds the threshold in 2022 (which will be shown in the financial statement for 2023).

For the tax year ending in 2021, the reduced tax rate can definitely be taken into account as a temporary support, the taxpayer does not have the choice to consider it as a de minimis support.

For the 2022 tax year, however, support can be used in several ways. Depending on the activity of the entrepreneur:

  • as general de minimis support,
  • or as a small-amount agricultural support,
  • or it can be used as a small-amount support for fishing;
  • but the entrepreneur can also decide not to use it as a de minimis support, but as a temporary support.

However, it must be taken into account that if the tax base for 2022 is higher than for 2021, the tax charged on the difference between the tax base for 2021 and the tax base for 2022, calculated with a reduced tax rate, cannot be a temporary support, but only a de minimis support. Therefore, for the year 2022, there is no choice between de minimis support and temporary support for this difference. Furthermore, if the taxpayer did not have to pay a tax advance in 2022, the tax benefit can be taken into account only as a de minimis support.

With regard to the content of the support, the law states that the support content of the temporary support (so in the case of both de minimis or temporary support) is an amount equal to the product of the tax base for the tax year and the difference between the tax rate established in the applicable municipality decree and the reduced tax rate.

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