How does the Hungarian personal income tax change in 2018?

No more personal income tax calculation by the employer

Up till now, employees had the opportunity to ask the employer to prepare their tax return documents for them. From 2018, this option is not available anymore. Employees can either

• prepare and submit their tax return documents on their own (either on paper, or, more conveniently, with the official software of the tax authority); or
• have the tax authority prepare their tax return documents, so they only have to confirm the calculations are right.

More lenient dividend payment

Regulations became more lenient regarding what kind of income can be taken as dividend. Read more about dividend payment here, or ask your accountant about the new conditions.

Better conditions for rental support

If you have employees living at a distance (e.g. in another city), you can provide rental support to them so they can rent accommodation where they can live during the week. From 2018, a greater portion of this support is tax free than before: in the first 2 years it can be 60%, in the next 2 years 40%, in the fifth year 20% of the minimum wage. Moreover, now this support can be given to employees working for you for a fixed term. Whether they are eligible now depends on the location of the accommodation.

Family tax allowances increased

Employees raising children can reduce their yearly tax base according to the number of children they are taking care of. The amount of the reduction is

• HUF 66,670 for 1 child
• HUF 116,670 for 2 children
• HUF 220,000 for 3 or more children

Using property tax for accommodation

If you sell property and use the income to provide accommodation for yourself or a family member in an institution such as a home for the elderly or the disabled, you do not have to pay the property tax, or you can reclaim it if you have already paid.

Accident reliefs become tax free

If your employee has an accident or if their home is damaged by fire, you as the employer can give them financial support to recuperate or rebuild. This financial support is an income for your employee, after which they do not have to pay any personal income tax.

What now?

If you operate a Hungarian company, ask your accountant if you have anything to do. Your accountant and your payroll advisor will be able to tell you if there are any steps to take, or if there is anything to watch out for now.

For other articles on the 2018 changes to taxation, check out the accountancy section of the Helpers blog.