Hungary usually offers various types of tax benefits to people working here. Starting from 1 January 2025, however, the three most prominent personal income tax benefits cannot be applied anymore to the salaries of most third-country nationals working in Hungary.
The change might be relevant to you in the following cases:
The precise definition is that to receive the listed personal tax benefits, the employee must be either a citizen of an EEA member state or of a country neighboring Hungary. Out of the countries neighboring Hungary, only Serbia and Ukraine are not members of the EEA. As a result, it is relevant to all third-country nationals, except for Serbian and Ukrainian citizens.
Please note: Hungarian news outlets seem to use the Hungarian equivalent of “guest worker” when talking about who the new regulation is relevant to. However, this conflates various technical terms.
The new regulation on personal income tax concerns the following tax benefits:
The new law does not concern you. Personal tax benefits may be applied to your Hungarian salary the same as before.
In line with the new law, the above listed 3 personal tax benefits may not be applied to your Hungarian salary. If you are currently receiving any of the above tax benefits, your net salary will decrease, even if your gross salary stays the same. Out of these, losing the tax benefit of those who are not yet 25 years old might be the biggest cut, since the 15% personal income tax will be a significant decrease to your net salary.
The new law does not affect your company costs. It will only have an impact on the take home pay of your employees. Since employers pay the employees’ taxes directly to the Tax Authority, payroll records and workflows must be updated so only the eligible employees receive the listed tax benefits in the future.
At your own discretion, you as an employer may decide if, in light of this, you want to give your employees a higher raise than what you originally considered for the next year (since the start of the year is always a good time to raise salaries, even if they do not get below the minimum wage).
We at Helpers Hungary do our best to make life easier for foreigners living, working, and doing business in Hungary. Our them of more than 25 experts offers services related to both business and immigration, including company setup, accounting and payroll, HR support, and work permit application, just to name a few.
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