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Measures List
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Measure Name
Date when measure came into force
2012 PIT reform 2011/11/30
Abolition of the tax base supplement scheme 2013/01/01
2014 PIT reform 2014/01/01
Results 1 - 3 of 3.

Generic Tax Name Personal income tax
Tax name in the national language Személyi jövedelemadó
Tax name in English Personal income tax
Member State HU-Hungary
Tax in force since 1988/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Act 117 of 1995 on personal income tax.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments
 
Geographical Scope

Hungary

 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments

Employment incomes of married couples are Taxed jointly
Taxed separately
Comments


Comments

Resident individuals are obliged to pay personal income tax.

 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments

Among others pension income, inheritance and most kinds of state scholarships are tax-exempt revenues.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Resident private individuals shall be subject to tax liability in respect of all their income (all-inclusive tax liability). The tax liability of non-resident private individuals shall apply to income that originates in Hungary as the place of gainful activity or is taxable in the Republic of Hungary by virtue of international agreement or reciprocity (limited tax liability).


Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments

The company has to pay tax after a company car under the Act LXXXII. of 1991 on vehicle tax. The company car tax on the use of a company car is not levied on the individual. 

The employer pays tax after low interest loans, however preferential loan for housing purposes is tax free provided certain conditions are met.

Meal cheques, meals at cantine, public transport, pension and health insurance (so-called fringe benefits) are also taxed by the employer. If the amount of fringe benefits exceeds a limit prescribed in the law, the excess is taxed at a higher tax rate.

The provision of computer devices given in connection with the work of the employee is tax free, however the supply of phone and telecommunication services is taxable by the provider of the income (employer or payer). Parking or accomodation given in connection with a business trip is not taxed.

The day-care service (nursery) is tax free, however the kindergarten service (pre-school) is taxable.



Comments

Resident individuals' income.

Individuals are subject to income tax on all items of income. The personal income tax law distinguishes the following categories of income:

  • Aggregate income (including income from dependent personal services, income from independent personal services and other aggregate income). Family tax allowance can be applied against aggregate income.
  • Incomes taxed separately (including entrepreneurial income, income from capital - like dividends, interest and capital gains -, benefits in kind).

 As of 1 January 2011 the tax rate is 16% in all categories of income.

 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments

1. Employment income

No deductions are allowed.

2. Self-employment income

The following may be deducted from the revenues from self-employment activities when determining income:

a) expenses actually incurred and substantiated during the tax year in connection with the activity, up to the amount of revenues produced by such activity (itemized expense accounting), or 

b) 10 per cent of the revenues from the self-employment activity (10 per cent expense ratio).


Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments

Allowances
The basic yearly allowance for an individual amounts to: 0.00  EUR/National currency
The basic yearly allowance for a couple amounts to: 0.00  EUR/National currency
Additional allowance for 1st child 750,000.00  EUR/National currency
Additional allowance for 2nd child 750,000.00  EUR/National currency
Additional allowance for 3rd child 5,925,000.00  EUR/National currency
Additional allowance for additional child 2,475,000.00  EUR/National currency
Additional allowance for old age dependents 0.00  EUR/National currency
Comments

Spouses or partners can split the total amount of the child allowance between each other if a single individual's tax base is not sufficient to claim the full allowance.

As of 1 January 2014 families whose combined PIT base is not sufficient to claim the maximum amount of the family tax allowance, can deduct the remaining sum from the 7% health insurance contribution and the 10% pension contribution. This measure does not effect the eligibility for social security benfits (pension, healthcare, transfer, etc.).


Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments

Tax credits:

  • Credit of disabled persons: In respect of severely handicapped private individuals, on the basis of a statement verifying such condition, an amount equal to 5 per cent of the prevailing monthly minimum wage in effect on the first day of the tax year (personal allowance) may be deducted each months from the tax on the consolidated tax base, as of the first day of and for the duration of the disability.
  • Tax credit of small-scale agricultural producers: The collective amount of the tax of the annual income of a small-scale agricultural producer, using itemized expense accounting or 10 per cent expense ratio, earned by such activities and, if using itemized expense accounting, of the bookkeeper's fee allowance, but no more than 100,000 forints (small-scale agricultural producers' tax allowance), may be deducted from the tax of the consolidated tax base.

Disposition of tax:

  • On the basis of contributions to the following funds/accounts 20 % tax refund (cash transfer) can be claimed with the following limitation:
    • voluntary mutual pension and health care fund: 20 % tax refund not exceeding HUF 150,000;
    • individual retirement account: 20 % tax refund not exceeding HUF 100,000 (HUF 130,000 in case of individuals being retired before 2020);
    • pension insurance account: 20 % tax refund not exceeding HUF 130,000.

The agrregated refund claimed cannot be higher than HUF 280,000 in a tax year  and is payable by the tax authorities to the taxpayer's individual account held with the fund.


Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments

Losses can be carried-forward for 5 years by private entrepreneurs and small-scale agricultural producers with a size limit of 50% of the tax base calculated without the losses.

Losses can be carried-back for 2 preceeding years by private entrepreneurs engaged in agricultural activities and small-scale agricultural producers with 30 % of the deferred losses for each years.

 


Exemptions
The following income is exempted from income tax























Comments

Tax exemption of small-scale agricultural producers:

Small-scale agricultural producers (including agricultural smallholders using flat-rate taxation) with revenues less than HUF 600,000 annually from such activities shall not be required to consider income from such revenues, while if revenues exceed the above amount, income shall be determined based on all revenues included. 

Interest from special savings accounts (Income from long term investment):

'Income from long-term investment’ shall mean the profit the private individual has realized through placing a sum under a long-term investment contract concluded with an investment service provider or a credit institution [“time deposit interest”] for at least 3 years (3-year term), which can be lengthened with another 2 years (2-year term). The tax rate shall be:

  • zero per cent on any time deposit interest established on the last day of the five-year term;
  • 10  per cent, if the private individual did not renew the existing deposit, on any time deposit interest established on the last day of the three-year term, or e xtends the time deposit for only a part of the funds originally deposited, on any time deposit interest established on the last day of the three-year term as commensurate for the funds withdrawn, or terminates the deposit upon maturity of the two-year term, on any time deposit interest established on the day of termination;
  • 16 per cent, if the private individual terminates the deposit before maturity of the three-year term, on any time deposit interest established on the day of termination.

The private individual is not required to declare his income from long-term investments if the applicable tax rate is zero per cent. In other cases the private individual shall assess the tax in his tax return, and shall pay it by the deadline prescribed for filing tax return.



Comments
 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Bracket 1 From   EUR/Natcur
To   EUR/Natcur
Rate: 16.00 %
Comments

Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Special surcharges
There are special surcharges in the form of:
Surcharge 1 : Name:
A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Separate taxation
Separate taxation applies to the following items: Employment income
Income from business or self-employed activities
Income from sport and entertainment activities
Benefits in kind (company car, meal cheques, etc) 16.0 %
Pension income
Owner-occupied immovable property
Dividends
Interests from government bonds
Interests from corporate bonds
Interests from special saving accounts
Interests from deposits
Royalties
Income from renting immovable property
Income from renting movable property
Capital gains on immovable property
Capital gains on movable property
Inheritance
Annuities from life insurance
Prizes and awards
Scholarships
Income from occasional activities
Revenues from donations and gifts
Revenues from lotteries and games activities 16.0 %
Comments

The tax base of

  • benefits in kind (meal contribution, holiday contribution schooling contribution, educational expenses contribution, public transport, contributions to supplementary pension and health care funds etc.) and
  • non-monetary revenues from games activities

is 1.19-fold of the value of the income.


Withholding taxes
The tax is withheld when paid to residents on: Dividends: 16.00 %
Final Creditable
Interests from governments bonds: 16.00 %
Final Creditable
Interests from corporate bonds: 16.00 %
Final Creditable
Interests from special saving accounts:
Final Creditable
Interests from deposits: 16.00 %
Final Creditable
Comments


Comments
 
Tax due date

Taxpayers are obliged to make advance payments of personal income tax during the tax year receiving income from aggregate income category. Income tax returns for a tax year must be filed by 20th of May (in the case of entrepreneurs, by 25th of February) of the year following the tax year. If the amount of tax actually paid in the tax year differs from the final tax liability, the difference (i) is payable by 20th of May of the following year, or (ii) is refundable by the tax authorities within 30 days of the taxpayer's claim.

 
Tax collector

The tax is collected by the National Tax and Customs Administration of Hungary.

 
Special features

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51m (d51a + d51c1)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 1,513,186.00 HUF 5.29
2011 1,367,832.00 HUF 4.86
2010 1,734,663.00 HUF 6.41
2009 1,897,169.00 HUF 7.22
2008 2,033,568.00 HUF 7.52
2007 1,816,574.00 HUF 7.11
2006 1,599,001.00 HUF 6.62
2005 1,449,725.00 HUF 6.46
2004 1,363,283.00 HUF 6.49
2003 1,325,273.00 HUF 6.95
2002 1,294,413.00 HUF 7.43
2001 1,142,892.00 HUF 7.43
2000 961,482.00 HUF 7.22

Comments