Entreprenuers emerge as winners of new gas subsidy

Since the new gas subsidy system was announced a few months ago, Hungarians have been counting cubic meters and "consumer units" (fogyasztási egységek) to find out if they are entitled to receive help from the state in the new system or will have to pay 40% to 70% more for heating next year. However, there are many ways to cheat the system as Hungarian media revealed yesterday.

Entrepreneurs can easily cheat the new gas price subsidy scheme and heat their luxurious villas with cheap gas, writes daily Népszabadság. They may also install extra gas meters for companies registered at the same property to take advantage of the subsidy.

Starting January, civil servants, regular employees and recent retirees will no longer receive state subsidies for gas and remote heating, as their monthly incomes per family member will probably rise over the Ft 94,000 (€363) threshold.

Those who cheat the system would be difficult to catch, as the tax authority would have to perform a complicated investigation in order to find out whether the number of people claiming to be living in one home really live there. A grandparent can easily be added as one more "consumer unit," and if someone is afraid to do this without an official document, they only have to spend an hour at the document office (okmányiroda) to increase the number of consumers at their home with a grandparent who lives elsewhere and in reality heats with wood.

Entrepreneurs have even more and easier options to cheat. They can decide what salary to admit and can claim to earn the minimum wage, which entitles them to the highest state subsidy. (The average of the salaries earned in the past three months determines the amount of the subsidy.) At the same time, several types of incomes are not considered, for example, the income of entrepreneurs paying EVA (simplified entrepreneur tax; egyszerűsített vállalkozói adó), who are not obliged to admit any income, as they did not have any income that is subject to SzJA (personal income tax; személyi jövedelemadó). However, entrepreneurs paying according to the EVA scheme cannot be required to consider their whole income personal income, as this is not the case; they have expenses related to their enterprise.

In addition, the size of the apartment or house does not count in the new system. The limit under which a home is entitled to state subsidy is 3,000 cubic meters (5,000 in case of families raising three or more children). An entrepreneur can heat a large villa and still get the subsidy if they claim to have a small income.

Punishment for cheating the system - if discovered at all - is small. If someone uses the subsidy without being entitled to it, they have to pay it back with interest. The new subsidy system is expected to result in a large number of lawsuits, and it is the state's task to prove it is right. This way, the gas subsidy can function as a cheap loan for those who are not entitled to it.

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