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Payroll taxes and contributions reduced in Hungary during the pandemic

May 11, 2020

Part of the economic relief measures and actions to improve job security in Hungary during the coronavirus pandemic, some payroll taxes are reduced to help retain employees. The structure of fringe benefits and healthcare contributions also changes.

Employer’s taxes reduced by 2%

Starting from 1 July 2020, the social contribution tax in reduced to 15.5% (from the current 17.5%). Currently, employers are paying payroll taxes of 19% on the gross salary of their employee, which is made up of the 17.5% social contribution tax and the 1.5% vocational training contribution. From 1 July, they will only have to pay a total of 17%.

Changes to the SZÉP Card fringe benefits

The SZÉP Card is a fringe benefit that lets employers achieve savings on payroll taxes, while supporting some sectors of the economy since employers can spend fringe benefits on their SZÉP Card only on specific products and services.

The combined yearly limit of the SZÉP Card fringe benefit is raised to HUF 800,000 (ca. EUR 2,300) from the previous HUF 450,000.

  • SZÉP Accommodation is raised from HUF 225,000 to HUF 400,000 (to be used for accommodation when going on a holiday)
  • SZÉP Catering is raised from HUF 150,000 to HUF 265,000 (to pay for food and meals)
  • SZÉP Leisure is raised from HUF 75,000 to HUF 135,000 (to pay for theater tickets, museum entrance fees, and the like)

If the employee receives benefits from various employers, the allowed total is still the same, as it is defined per person, not per job.

Payroll taxes for topping up an employee’s SZÉP Card to the above limits:

  • between 22 April and 30 June 2020: 15% income tax and 0% social contribution tax (so the employer pays only 15% instead of 32.5%)
  • between 1 July and 31 December 2020: 15% personal income tax and 15.5% social contribution tax (so the employer pays only 30.5% instead of 32.5%)

Healthcare contribution for unpaid leave

Healthcare contribution is a payroll tax that is usually paid by employees indirectly: employers deduct it from the gross salary and transfer it to the social security fund. If someone goes on an unpaid leave, usually they must keep paying the healthcare contribution themselves even though they are not receiving a salary so that they do not lose their eligibility for healthcare services.

From now on, however, during the state of emergency, starting from 1 May 2020 employers must pay the healthcare contribution for their employees who went on unpaid leave because of the pandemic. This will let employers use the various healthcare services they need, but it will not make them eligible for receiving sick leave and other benefits. The sum of the healthcare contribution to be paid by the employer is HUF 7,710 (ca. EUR 22) / month, and instead of paying monthly, the employer may choose to pay the total within 60 days after the state of emergency ends.

What to do?

If you or your employees are affected, contact your accountant to discuss how to proceed. They will help your company remain compliant with current regulations and take even better care of your employees.


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