Changes on local business tax 2021.01.

Temporary tax relief on Local Business tax for 2021


639/2020 and 640/2020 government decree (published on December 22, 2020) -in order to mitigate the adverse impact of the COVID-19 pandemic on national economy- make the possibility of applying 1% tax rate for local business tax for 2021 where the original municipal decree contains higher tax rate than 1%. It is applicable for the SME sector only.


The companies that would like to apply for the reduction have to comply with the following amendments to limits set in Act XXXIV, 2004 on small and medium-sized enterprises (SME):


  • Net turnover or Total Assets is not more than HUF 4 billion instead of limits set in 3. §. (1) b) (together with related parties), and
  • total headcount is less than 250 persons (also aggregated numbers)



Those who would like to apply the reduced tax rate of local business tax, must submit a declaration on compliance with the conditions by February 25, 2021 for the local tax authority.


However, there are further exclusions (e.g.: companies reaching the limit of temporary subsidies), so feel free to contact our colleagues with any question.