Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2020/1561 granting temporary support pursuant to Regulation (EU) 2020/672 to Hungary to mitigate unemployment risks in the emergency following the COVID-19 outbreak
Date: 2021-12-21
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU loan, Hungary, aid to undertakings, coronavirus disease, emergency aid, employment aid, epidemic, fight against unemployment, public expenditure, self-employed person

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   EUROPEAN COMMISSION  Brussels, 21.12.2021  COM(2021) 825 final 2021/0435 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2020/1561 granting temporary support pursuant to Regulation (EU) 2020/672 to Hungary to mitigate unemployment risks in the emergency following the COVID-19 outbreak  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Council Regulation (EU) 2020/672 (“SURE Regulation”) lays down the legal framework for 
providing  Union  financial  assistance  to  Member  States,  which  are  experiencing,  or  are 
seriously threatened with, a severe economic disturbance caused by the COVID-19 outbreak. 
Support  under  SURE  serves  for  the  financing,  primarily,  of  short-time  work  schemes  or 
similar measures aimed at protecting employees and the self‐employed and thus reducing the 
incidence of unemployment and loss of income, as well as for the financing, as an ancillary, 
of some health-related measures, in particular in the workplace. 

On  23  October  2020  the  Council  granted  financial  assistance  to  Hungary  with  a  view  to 
complementing  its  national  efforts  to  address  the  impact  of  the  COVID-19  outbreak  and 
respond  to  the  socioeconomic  consequences  of  the  outbreak  for  workers  and  the  self-
employed. 

On 1 December 2021,  Hungary  requested  again  Union financial assistance under the SURE 
Regulation.  

In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the 
Hungarian  authorities  to  verify  the  sudden  and  severe  increase  in  actual  and  planned 
expenditure directly  related to  Hungary’s  labour market  measures caused by the COVID-19 
pandemic.  In  particular,  these  measures  pertain  to  a  combination  of  a  new  measure  and 
existing measures referred to in Council Implementing Decision (EU) 2020/1561: 

(a) 

(b) 

(c) 

 (d) 

an existing exemption from the employers’ social security contributions and training 
levy  for  the  period  from  March  to  December  2020  as  well  as  a  reduction  in  the 
employers’ rehabilitation contribution tax for the period from March to June 2020 for 
the  sectors  most  hit  by  the  pandemic  was  extended  until  the  end  of  state  of 
emergency,  with  expenditure  covering  the  period  from  December  2020  until  June 
2021. 

an existing exclusion of personnel costs from the tax base of the small enterprise tax 
("KIVA"),  for  the  period  from  March  to  June  2020  in  the  sectors  most  hit  by  the 
pandemic,  was  extended  until  the  end  of  the  state  of  emergency,  with  expenditure 
covering the period from December 2020 until June 2021. Only the part of the total 
expenditure related to  companies that reduce or suspend working time or  when the 
employees are continuously in employment up to the latest available outturn data has 
been requested. 

an existing exemption from the lump sum tax ("KATA") regime, for the period from 
March  to  June  2020  for  small  tax-payers  in  certain  sectors,  was  extended  until  the 
end  of  state  of  emergency,  with  expenditure  covering  March  and  April  2021.  Only 
the  part  of  expenditure  related  to  the  support  of  self-employed  and  one-person 
companies has been requested.  

a  new  one-off  income  support  scheme  for  self-employed  in  sectors  affected  by 
lockdown measures under the condition that they maintain their activities for at least 
two  months  after  the  prospective  end  of  the  state  of  emergency.  The  one-time 
payment  amounts  to  the  monthly  guaranteed  minimum  wage  (HUF  219  000).  The 
eligibility period terminates with the end of the state of emergency. The target group 

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of  the  scheme  are  sole  entrepreneurs  that  do  not  have  employees,  which  are  not 
eligible for support under the sectoral wage scheme.  

Hungary provided the Commission with the relevant information.  

Taking into account the available evidence, the Commission proposes to the Council to adopt 
an  Implementing  Decision  to  grant  financial  assistance  to  Hungary  under  the  SURE 
Regulation in support of the measures above.  

• 

Consistency with existing policy provisions in the policy area 

The present proposal is fully consistent with Council Regulation (EU) 2020/672, under which 
the proposal is made. 

The present proposal comes in addition to another Union law instrument to provide support to 
Member States in case of emergencies, namely Council Regulation (EC) No 2012/2002 of 11 
November 2002 establishing the European Union Solidarity Fund (EUSF) (“Regulation (EC) 
No 2012/2002”). Regulation (EU) 2020/461 of the European Parliament and of the Council, 
which amends that instrument to  extend its  scope to  cover major public  health emergencies 
and to define specific operations eligible for financing, was adopted on 30 March.   

• 

Consistency with other Union policies 

The proposal is part of a range of measures developed in response to the current COVID-19 
pandemic  such  as  the  “Coronavirus  Response  Investment  Initiative”,  and  it  complements 
other  instruments  that  support  employment  such  as  the  European  Social  Fund  and  the 
European Fund for Strategic Investments (EFSI)/InvestEU. By making use of borrowing and 
lending in this particular case of the COVID-19 outbreak for supporting Member States, this 
proposal  acts  as  a  second  line  of  defence  to  finance  short-time  work  schemes  and  similar 
measures,  helping  protect  jobs  and  thus  employees  and  self-employed  against  the  risk  of 
unemployment.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis for this instrument is Council Regulation (EU) 2020/672.   

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  follows  a  Member  State  request  and  shows  European  solidarity  by  providing 
Union financial assistance in the form of temporary loans to a Member State affected by the 
COVID-19  outbreak.  As  a  second  line  of  defence,  such  financial  assistance  supports  the 
government’s increased public expenditure on a temporary basis in respect of short-time work 
schemes  and  similar  measures  to  help  them  protect  jobs  and  thus  employees  and  self-
employed against the risk of unemployment and loss of income. 

Such  support  will  help  the  population  affected  and  helps  to  mitigate  the  direct  societal  and 
economic impact caused by the present COVID-19 crisis.  

• 

Proportionality 

The proposal respects the proportionality principle. It does not go beyond what is necessary to 
achieve the objectives sought by the instrument.  

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3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

Due to the urgency to prepare the proposal so that it can be adopted in a timely manner by the 
Council, a stakeholder consultation could not be carried out. 

• 

Impact assessment 

Due to the urgent nature of the proposal, no impact assessment was carried out. 

4. 

BUDGETARY IMPLICATIONS 

The  Commission  should  be  able  to  contract  borrowings  on  the  financial  markets  with  the 
purpose  of  on-lending  them  to  the  Member  State  requesting  financial  assistance  under  the 
SURE instrument.  

In  addition  to  the  provision  of  Member  State  guarantees,  other  safeguards  are  built  into  the 
framework in order to ensure the financial solidity of the scheme: 

 

 

A rigorous and conservative approach to financial management; 

A  construction  of  the  portfolio  of  loans  that  limits  concentration  risk,  annual 
exposure and excessive exposure to individual Member States whilst ensuring 
sufficient resources could be granted to Member States most in need; and 

 

Possibilities to roll over debt. 

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2021/0435 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2020/1561 granting temporary support pursuant 
to Regulation (EU) 2020/672 to Hungary to mitigate unemployment risks in the 
emergency following the COVID-19 outbreak 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, 

Having regard to Council Regulation (EU) 2020/672 of 19 May 2020 on the establishment of 
a  European  instrument  for  temporary  support  to  mitigate  unemployment  risks  in  an 
emergency (SURE) following the COVID-19 outbreak1, and in particular Article 6(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Further to a request from Hungary on 6 August 2020, on 23 October 2020 the Council 
granted financial assistance to Hungary in the form of a loan amounting to a maximum 
of EUR 504 330 000  with  a maximum  average  maturity of  15  years,  with  a view to 
complementing  Hungary’s  national  efforts  to  address  the  impact  of  the  COVID-19 
outbreak and respond to the socioeconomic consequences of that outbreak for workers 
and the self-employed.  

The loan was to be used by Hungary to finance similar measures to short-time work 
schemes  and  health-related  measures,  as  referred  to  in  Article  3  of  Council 
Implementing Decision (EU) 2020/15612.  

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Hungary.  This  has  led  to  a  still  sudden  and  severe  increase  in  public  expenditure  in 
Hungary  in  respect  of  a  new  measure,  namely  a  one-off  income  support  scheme  for 
self-employed in sectors affected by protection measures and measures referred to in 
Article 3 (f), (g), (h), (i) and (j) of Implementing Decision (EU) 2020/1561.  

The COVID-19 outbreak and the extraordinary measures implemented by Hungary in 
2020  and  2021  to  contain  that  outbreak  and  its  socioeconomic  and  health-related 
impact had and still have a dramatic impact on public finances. Hungary had a general 
government  deficit  and  debt  of  8.0%  and  80.1%  of  gross  domestic  product  (GDP) 
respectively by the end of 2020. According to the Commission's 2021 autumn forecast, 
Hungary’s  general  government  deficit  and  debt  are  forecast  to  narrow  to  7.5%  and 
79.2%  of  GDP  respectively  in  2021  and  Hungary’s  GDP  is  projected  to  increase  by 
7.4% in 2021. 

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OJ L 159, 20.5.2020, p. 1. 
Council Implementing Decision (EU) 2020/1561 of 23 October 2020 granting temporary support under 
Regulation (EU) 2020/672 to Hungary to mitigate unemployment risks in the emergency following the 
COVID-19 outbreak (OJ L 357, 27.10.2020, p. 24). 

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(5) 

(6) 

(7) 

On 1 December 2021, Hungary requested further financial assistance from the Union 
of  EUR 147 140 000  with  a  view  to  continuing  to  complement  its  national  efforts 
undertaken  in  2020  and  2021  to  address  the  impact  of  the  COVID-19  outbreak  and 
respond to the socioeconomic consequences of the outbreak for workers and the self-
employed. In particular it concerns the measures set out in recitals 6 to 8.  
On  the  basis  of  ‘Government  Decree  No  485/2020  (XI.  10.)’3,  the  authorities  have 
extended until the end of the state of emergency and amended a number of tax-related 
measures,  as  referred  to  in  Articles  3(f),  (g),  (h)  and  (j)  of  Implementing  Decision 
(EU) 2020/1561. The loan has been requested to cover expenditure for the period from 
December 2020 until June 2021 only. The decree contains an explicit condition for the 
beneficiaries  to  maintain  employment  contracts  that  were  in  place  at  the  time  of  the 
entry into force of the decree and not to terminate these contracts by notice from the 
employer for the duration of the measure. The scope of the sectors eligible for support 
was  modified  compared  to  the  initial  design  of  the  measures,  as  amended  in  the 
Government Decrees.4 

For the sectors most hit by the pandemic, the authorities introduced an exemption from 
the employers’ social security contributions and training levy, initially  for the period 
from March to December 2020, as well as a reduction in the employers’ rehabilitation 
contribution tax, initially for the period from March to June 2020.  

The  authorities  have  also  introduced  an  exemption  of  personnel  costs  from  the  tax 
base of the small enterprise tax (‘KIVA’), initially for the period from March to June 
2020.  

For all these measures, only the part of total expenditure (or foregone revenue) related 
to  companies  that  reduce  or  suspend  working  time,  or  when  the  employees  are 
continuously in employment up to the latest available outturn data, has been requested. 
Since  those  measures  consist  of  foregone  revenue  for  the  Government,  they  can  be 
considered to be equivalent to public expenditure. 

Still  in  relation  to  tax-related  measures,  on  the  basis  of  ‘Government  Decree  No. 
105/2021  (III.  3.)’,‘Government  Decree  No.  147/2021  (III.  27)’  and  ‘Government 
Decree  No.  204/2021  (IV.  29)’.5,  the  authorities  amended  the  exemption  from  the 
small  business  lump  sum  tax  (‘KATA’)  regime,  as  referred  to  in  Article  3(i)  of 
Implementing Decision (EU) 2020/1561, which was initially introduced for the period 
from March to June 2020 and extended for the period from March to April 2021. Only 
the  part  of  expenditure  related  to  the  support  of  the  self-employed  and  one-person 
companies  has  been  requested.  The  measure  can  be  considered  a  similar  measure  to 
short-time  work  schemes,  as  referred  to  in  Regulation  (EU)  2020/672,  as  it  aims  to 
protect  the  self-employed  or  similar  categories  of  workers  from  reduction  or  loss  of 
income. 

(8)  With ‘Government Decree No. 310/2021. (VI. 7.)’ on the compensation support of the 
self-employed, Hungary has also introduced a new one-off income support scheme for 
self-employed in sectors affected by lockdown measures under the condition that they 
maintain their activities for at least two months after the prospective end of the state of 

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5 

Promulgated in the Hungarian Official Gazette (XI. 10). 
See  Article  1  of  Government  Decree  No.  571/2020  (XII.  9.),  Article  1  of  Government  Decree  No. 
638/2020 (XII. 22.), Article 1 of Government Decree No. 105/2021 (III. 3.), Article 1 of Government 
Decree No. 147/2021 (III. 27.) and Article 1 of Government Decree No. 204/2021 (IV. 29.). 
Article 1 of Government Decree No. 147/2021(III.27), Article 1 of Government Decree No. 204/2021 
(IV.29). 

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(9) 

emergency.6  The  one-time  payment  amounts  to  the  monthly  guaranteed  minimum 
wage  (HUF  219,000).  The  eligibility  period  terminates  with  the  end  of  the  state  of 
emergency.  The  target  group  of  the  scheme  are  sole  entrepreneurs  that  do  not  have 
employees,  which  are  not  eligible  for  support  under  sectoral  wage  scheme.  The 
measure can be considered a similar measure to short-time work schemes, as referred 
to  in  Regulation  (EU)  2020/672,  as  it  aims  to  protect  the  self-employed  or  similar 
categories of workers from reduction or loss of income.   

that 

Hungary fulfils the conditions for requesting financial assistance set out in Article 3 of 
Regulation  (EU)  2020/672.  Hungary  has  provided  the  Commission  with  appropriate 
evidence 
increased  by 
the  actual  and  planned  public  expenditure  has 
EUR 897 720 542 as of 1 February 2020 due to the national measures taken to address 
the socioeconomic effects of the COVID-19 outbreak.  This  constitutes a  sudden and 
severe increase  because  it  is  related  also  to both  a  new measure  and an extension of 
existing measures directly related to measures similar to short-time work schemes that 
cover  a  significant  proportion  of  undertakings  and  of  the  labour  force  in  Hungary. 
Hungary financed EUR 113 740 000 of the increased amount of expenditure through 
Union funds.  Hungary financed  EUR 132 510 542 of the increased amount  of public 
expenditure through its own financing. 

(10)  The Commission has consulted Hungary and verified the sudden and severe increase 
in  the  actual  and  planned  public  expenditure  directly  related  to  measures  similar  to 
short-time work schemes, referred to in the request of 1 December 2021, in accordance 
with Article 6 of Regulation (EU) 2020/672.  

(11)  Financial assistance should therefore be provided with a view to helping  Hungary to 
address  the  socioeconomic  effects  of  the  severe  economic  disturbance  caused  by  the 
COVID-19  outbreak.  The  Commission  should  take  the  decisions  concerning 
maturities,  size  and  release  of  instalments  and  tranches  in  close  cooperation  with 
national authorities.  

(12)  Hungary  and  the  Commission  should  take  this  Decision  into  account  in  the  loan 

agreement referred to in Article 8(2) of Regulation (EU) 2020/672.  

(13)  This Decision should be without prejudice to the outcome of any procedures relating 
to  distortions  of  the  operation  of  the  internal  market  that  may  be  undertaken,  in 
particular  pursuant  to  Articles  107  and  108  of  the  Treaty.  It  does  not  override  the 
requirement  for  Member  States  to  notify  instances  of  potential  State  aid  to  the 
Commission under Article 108 of the Treaty. 

(14)  Hungary  should  inform the Commission  on a regular basis of the implementation  of 
the planned public expenditure, in order to enable the Commission to assess the extent 
to which Hungary has implemented that expenditure. 

(15)  The  decision  to  provide  financial  assistance  has  been  reached  taking  into  account 
existing  and  expected  needs  of  Hungary,  as  well  as  requests  for  financial  assistance 
pursuant  to  Regulation  (EU)  2020/672  already  submitted  or  planned  to be  submitted 
by other Member States, while applying the principles  of equal  treatment,  solidarity, 
proportionality and transparency,  

6 

‘Government  Decree  No.  310/2021.  (VI.  7.)’  on  the  compensation  support  of  the  self-employed,  as 
referred to in Hungary’s request of 1 December 2021. 

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HAS ADOPTED THIS DECISION:  

Article 1 
Implementing Decision (EU) 2020/1561 is amended as follows:  

(1)   Article 2 is amended as follows: 

(a) 

paragraph 1 is replaced by the following:  

‘1.  The  Union  shall  make  available  to  Hungary  a  loan  amounting  to  a  maximum  of 
EUR 651 470 000. The loan shall have a maximum average maturity of 15 years.’; 

(b) 

paragraph 4 is replaced by the following:  

‘4.  The  first  instalment  shall  be  released  subject  to  the  entry  into  force  of  the  loan 
agreement  provided  for  in  Article  8(2)  of  Regulation  (EU)  2020/672.  Any  further 
instalments shall be released in accordance with  the terms of that loan agreement or, 
where  relevant,  be  subject  to  the  entry  into  force  of  an  addendum  thereto,  or  of  an 
amended loan agreement .’; 

(2) 

Article 3 is replaced by the following:  

Hungary may finance the following measures: 

‘Article 3 

(a) 
temporary  support  for  upgrading  accommodation  in  tourist  destinations  in 
order  to  retain  the  existing  workforce  as  provided  for  by  Government  Resolution 
2080/2020 on the national development of accommodation, for the part of expenditure 
related to the support of self-employed and one-person companies; 

(b) 
temporary  support  for  food-processing  companies  as  provided  for  by  the 
Decree of Minister of Agriculture No. 25/2020, for the part of expenditure related to 
the support of self-employed and one-person companies; 

(c) 
temporary support for horticultural  companies in  the sectors of  growing  non-
perennial crops and of plant propagation as provided for by the Decree of Minister of 
Agriculture  No.  26/2020,  for  the  part  of  expenditure  related  to  the  support  of  self-
employed and one-person companies; 

(d) 
temporary support for fish farming companies, as provided for by the Decree 
of  Minister  of  Agriculture  No.  30/2020,  for  the  part  of  expenditure  related  to  the 
support of self-employed and one-person companies; 

(e) 
the  extension,  until  30  June  2020,  of  those  child  care  benefits  which  expired 
during the period of the state of danger, as provided for by  Government  Decree No. 
59/2020. (III. 23.) and Article 71 of Act LVIII of 2020; 

(f) 
the suspension  of the employers’ social contribution tax in  certain  sectors, as 
provided for by point (a) of Article 4 of ‘Government Decree No 47/2020. (III. 18.)’ 
(as amended), for the part of expenditure related to companies that reduce or suspend 
working time or when the employees were continuously in employment, as extended 
and amended; 

(g) 
exemptions  from  the  employers’  training  levy  in  certain  sectors,  as  provided 
for  by  point  (a)  of  Article  4  of  ‘Government  Decree  No  47/2020.  (III.  18.)’  (as 

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amended),  for  the  part  of  expenditure  related  to  companies  that  reduce  or  suspend 
working time or when the employees were continuously in employment, as extended 
and amended; 

(h) 
the  reduction  of  the  rehabilitation  contribution  tax  of  employers  in  certain 
sectors as provided for by point (a) of Article 4 of ‘Government Decree No 47/2020. 
(III. 18.)’ (as amended), for the part of expenditure related to companies that reduce or 
suspend  working  time  or  when  the  employees  were  continuously  in  employment,  as 
extended and amended; 

(i) 
a  tax  exemption  for  small  tax-payers  from  the  small  business  lump  sum  tax 
(‘KATA’)  regime  in  certain  sectors,  as  provided  for  by  Article  5  of  ‘Government 
Decree No 47/2020. (III. 18.)’ (as amended), for the part of expenditure related to the 
support of the self-employed and one-person companies, as extended and amended; 

(j) 
the exclusion of personnel costs from the tax base of the small  enterprise tax 
(‘KIVA’) in certain sectors, as provided for by ‘Government Decree No 47/2020. (III. 
18.)’  (as  amended),  for  the  part  of  expenditure  related  to  companies  that  reduce  or 
suspend  working  time  or  when  the  employees  were  continuously  in  employment,  as 
extended and amended; 

a lump sum benefit for healthcare workers as an acknowledgment of their extra 
(k) 
work during the pandemic, as provided for by ‘Government Decree No 275/2020. (VI. 
12.)’; 

costs related to  special  measures to  control the  pandemic introduced in  state-

(l) 
owned companies; 

(m) 
costs  related  to  special  measures  to  control  the  pandemic  and  to  protect  the 
personal  health  of  public  officials,  as  provided  for  by  ‘Government  Decree  No 
250/2014 (X. 2.) on Directorate-General for Public Procurement and Supply (KEF)’; 

(n) 
costs  related  to  infrastructure  and  investments  in  hospitals  for  high  level 
protection  of  healthcare  workers  and  patients,  as  provided  for  by  ‘Government 
Resolution 1012/2020 (I. 31.) on the Establishment of the Operative Staff’; 

(o) 
direct  costs of personal  protection tools and equipment in  hospitals and other 
health care institutions for high level protection of healthcare workers, as provided for 
by ‘Government Resolution 1012/2020 (I. 31.) on the Establishment of the Operative 
Staff’. 

(p) 
one-off  income  support  scheme  for  self-employed  in  sectors  affected  by 
protection measures under the condition that they maintain their activities for at least 
two  months  after  the  prospective  end  of  the  state  of  emergency,  as  provided  for  by 
Government Decree No. 310/2021; 

(3) 

Article 4 is replaced by the following:  

‘Article 4 

1. 

2. 

Hungary shall inform the Commission by 28 April 2021, and every six months 
thereafter  of  the  implementation  of  the  planned  public  expenditure  until  that 
planned public expenditure has been fully implemented.  

Where  measures  referred  to  in  Article  3  are  based  on  planned  public 
expenditure  and  have  been  subject  to  an  Implementing  Decision  amending 

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(EU)  2020/1561,  Hungary  shall 

Implementing  Decision 
the 
Commission  within  6  months  after  the  date  of  adoption  of  that  decision,  and 
every  6  months  thereafter  of  the  implementation  of  the  planned  public 
expenditure until that planned public expenditure has been fully implemented.’ 
. 

inform 

This Decision is addressed to Hungary. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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