From 1 January 2016, the rate of personal income tax is 15%.
From 1 January 2016, the family tax advantage increased by HUF 2,500 per child in a family with two children to HUF 12,500, and for families with one or three or more children the amount of the tax advantage remains unchanged (HUF 10,000, and HUF 33,000 / child / month).
A new opportunity provided for private individuals, subject to compliance with certain conditions, already for the 2015 tax year, to submit a so-called ?tax return declaration? to the employer or directly to the tax authority, by 31 January following the end of the tax year. On the basis of this declaration, the tax authority will prepare the tax return for the private individual.
Minimal tax base
The rule, already adopted in 2014, will be applicable for the first time for the 2015 tax year: under this, when establishing the minimal tax base, the cost of goods sold is not deductible, thus essentially 2% of the total revenues will be the tax base for companies that do not wish to make a detailed statement on the reasons for their losses or profits being lower than the expected level.
Growth tax credit
Successful start-ups that have been in operation for at least three years and increasing their pre-tax profit fivefold yearly can avail of a so-called growth tax credit. Under this rule, they must pay the corporate tax for the increment in instalments over the next two years and/or they can be exempted from the payment of the amounts becoming due later if they implement a tangible asset investment or an increase in the employee headcount (provided they do not avail of other tax discounts).
Value Added Tax (VAT)
Deductibility of VAT in invoices
In a tax return for a reference period, only procurement invoices that are not older than the previous calendar year can be taken into account. Invoices appearing after this must be charged back to the original period using self-revision.
Transactions with periodic settlement
The time of performance for transactions with periodic settlement is the last day of the period, or the issue date of the invoice if the issue and the due date precede the end of the period, or the due date for the consideration but 60 days after the end of the period at the latest, rather than 30 days as before.
Advertising tax
The basis for the advertising tax will continue to include the cost of advertising for own purposes, in addition to the revenues generated by publication. The rate of the advertising tax is, in accordance with the mid-year changes, 0% below a HUF 100 million tax base, and uniformly 5.3% above this base (earlier, it was 0% below HUF 500 million, and above this, in 5, 10, 15, and 20 billion bands 1%, 10%, 20%, 30% and 50% tax had to be paid, respectively).
Product fee
In the event of importation of cars and motorcycles a fee is payable on parts subject to a product fee (tyres, batteries, etc.) as a lump sum (earlier the product fee had to be determined on the basis of the weight of them, on an itemised basis).
The product fee obligation for products imported from abroad and their packaging will be valid for the VAT registration of foreign companies engaged in distance selling to private individuals.
If there are no appropriate records of the packaging material, the tax authority establishes the product fee obligation by applying the highest rate applicable to ?other? products.
Excise tax
Companies engaged in road haulage and passenger transport can reclaim only HUF 7 per litre instead of the earlier HUF 11 for the diesel purchased in Hungary.
Vehicle tax
'Green' cars will be exempt from the vehicle tax.
Electronic cars and zero emissions cars are
considered green cars. The unpaid vehicle tax is
considered as de minimis aid.
Hungary Income Tax Rate for Individual Tax Payers
Hungary's taxation of an individual's income is flat and in 2014 the tax rate in Hungary for an individual is 16%.
An individual pays tax on his income as a wage-earner or as a self-employed person. Tax for an individual who meets the criteria of a "permanent resident" in Hungary will be calculated on his income in Hungary and abroad. A foreign resident who is employed in Hungary pays tax only on his income earned in Hungary.
To be considered a Hungarian resident, there are a number of
criteria to be met, such as ownership of an apartment, the
permanent place of residence of the family and the criterion of
spending more than 183 days a year in Hungary.
An employer is obligated to deduct, immediately on a monthly
basis, the tax payable on an employee's salary. A self-employed
person must prepay income tax that will be offset on filing an
annual return. The advance payment is determined on the basis of
the return made for the previous year. In the event of a new
business, the advance will be calculated on the basis of
estimates made by the owner of the business.
Certain payments are deductible from taxable income as detailed
below.
Corporate Tax Rates in Hungary
Corporate tax in Hungary in 2014 is fixed at 19%.
Corporate tax rate for income up to HUF 500 million is 10%.
Capital Gains Tax in Hungary
Capital gains in Hungarian companies are added to regular
income. There is a participation exemption under certain terms
.Dividend received by a Hungarian company is generally tax
exempt .
Individuals pay 16% for capital gains and other investment
income.
Dividend income is taxed at 16%.
Interest income is taxed at 16% too.
Tax Deductions at Source in Hungary
Hungary Taxation of Employees
The employer is obligated to deduct tax at source from a
salaried worker and to allocate an additional sum for social
insurance including pension, healthcare and unemployment.
The rates of tax are as follows:
Employer 28.5%
Employee 18.50%
Hungary Tax Withholding Rates
Hungary Dividend, Royalties and Interest
When payments of the above sorts are made to a foreign resident
of a non-treaty country, the deductions at source are the
following rates:
Dividend 0
Royalties 0
Interest 0
Hungary Dates of filing Returns / Reporting and Payment
The tax year in Hungary is the calendar year ending on December
31st.
An Individual
If your income is only from a salary, you are not obliged to
file an annual return.
An employer is obliged to deduct tax monthly at source from the
wage of a hired worker. The tax deducted will be transferred by
the employer to the Tax Authorities by the 12th of each month
for the previous month.
An individual who is obliged to make an advance payment of income tax, will do so each month or each quarter, depending on the scope of his business.
The advance payment here too will be paid by the 12th of the following month.
The annual return for an individual including a supplement for any debt for tax arrears should be filed by March 20th of the year after the tax year.
A Limited Company
A company is bound to prepay tax during the year. The advance
payments are determined on the basis of the figures for the
previous year. In the event of a new company, the advance
payment will be calculated according to the assessment of the
profits forecast for the first year. A report on advance
payments is filed once a month, if the tax forecast is in excess
of HUF 3 million. If the tax forecast is less than this, the
report is filed once every three months.
The date for payment is the 20th day after the period of the
report (whether monthly or quarterly as stated). The company
will pay the difference between the tax it forecast and the tax
due for the current year by December 20th.
The date for filing an annual return is May 31st in the year following the year reported.