Taxation/salaries

Working in Europe | Taxation/salaries | Hungary

A foreign national working in Hungary will, subject to certain conditions, become liable to Hungarian taxation. The main tax is personal income tax. Other taxes to which an expatriate can become liable are local taxes, vehicle tax, property tax, property transfer tax, etc. Expatriates may become liable to Hungarian social security contributions as well.

Taxable income of an individual resident in Hungary includes all income regardless of age, occupation, citizenship and family circumstances. Husband and wife are treated as separate individuals for tax purposes.

In Hungary the tax year is the calendar year. Generally, income is taxed in the year in which the payment or non-cash benefit is actually received. Tax residents of Hungary will be taxed on their worldwide income while non-residents will be taxed only on domestic source income or on income which is taxable in Hungary according to the relevant Double Tax Treaty. Post-doctoral researchers will usually have to pay tax in their country of residence, either as employees of a university/research institution there, or as self-employed workers conducting research in partnership with such institutions.

The personal income tax rate is 16% of taxable gross income. The amount of the family tax allowance in 2013: HUF 62,500/child (approx. EUR 212) for one or two dependent children or HUF 206,250/child (approx. EUR 699) for three or more dependent children. The family tax allowance can be deducted from the tax base. As for the social tax liability of the employer, the tax base is the gross income paid to the employee. The tax rate is 27%.

Individuals may be subject to 14% healthcare tax on certain types of separately taxed income, including certain kind of dividend income, income from borrowing and lending securities, capital gains, income from entrepreneurship and the total amount of rental income exceeding the annual amount of HUF 1,000,000 (approx. EUR 3,390). The 14% health care tax is payable by the individual if the health care contributions paid by the company and the total amount of 14% healthcare tax paid already does not reach a total of HUF 450,000 (approx. EUR 1 525) in a year.

Foreign nationals working in Hungary have to register with the competent tax authority and apply for a personal tax identification number (card) in order to be able to pay taxes and file a tax return.

Hungary operates a system of self-assessment of tax. After the end of each calendar year a tax return must be filed if the individual has received income taxable in Hungary. However, if the conditions set out in the Personal Income Tax Act are met, either the Hungarian employer can prepare and file the annual personal income tax return on behalf of the employee or, in certain cases, the individual can ask the tax authority to prepare it. The deadline for filing an individual’s tax return is 20 May of the year following the tax year. A delay in filing a tax return results in a penalty (default fine) being charged up to HUF 200,000 (approx. EUR 678).

You may correct your tax return by a self-revision. However you will need to pay a self-revision charge on the increase of tax liability due to the revision (if there is a decrease, there is no charge payable)

MORE INFORMATION

 

Useful links:

More information on taxation in Hungary in general:

http://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/hungary/index_en.htm

 

Information from the National Tax and Customs Administration:

http://en.nav.gov.hu/taxation

 

Short summary of the taxation of individuals:

http://en.nav.gov.hu/taxation/taxinfo/summary_individuals.html

 

More information on double taxation:

http://europa.eu/youreurope/citizens/work/taxes/double-taxation/index_en.htm