Find out about income tax in Hungary: when to pay, how to pay, and how to get the tax ID number...
Residents are liable to tax on their worldwide income.
Non-residents are liable to tax on their income derived from Hungary, or on such income as is taxable in Hungary under the terms of a double tax treaty or by virtue of a reciprocity principle.
The general personal income tax rate in Hungary is 16 percent.
All incomes are taxed at the general rate. There are no special rates for specific incomes, but the calculation of the tax base is individual in the case of each type of income.
Tax ID Number
Before receiving taxable income, taxpayers need to register with the tax authority (Nemzeti Adó- és Vámhivatal), and acquire their tax ID number (Adószám).
The tax ID number is a ten-digit numerical code that always starts with “8”.
The code can be acquired by filing the completed official application form with the tax authority. After generating the code the tax office sends the number and the tax ID card by priority mail to the taxpayer's mailing address.
- For more information and the registration form from nav.gov.hu: Click here
Private individuals who have no VAT number and are not considered sole entrepreneurs only need to submit an annual tax return, to be completed by 20 May of the following year. In general, private individuals do not need to submit quarterly or monthly tax returns during the year.
The “time of submission” is the date when the individual personally files the tax return (or any petition) directly to the tax authority's counter service, or the date when it is taken by the Hungarian Postal Service.
During a financial year, when a taxpayer receives taxable income, advance tax payments are deducted by the tax authorities. Generally the payer of the income (employer, principal, lessee, etc.) deducts the tax advance from the gross income and declares and pays it to the tax authorities directly.
However, if the payer doesn't or can't deduct the advance tax (or is simply not obliged to), the private individual has to pay the advance tax on their own, quarterly, before the 12th day after the end of each quarter.
The “date of payment” in this case is the date when the transfer is credited on the tax authority's bank account. Therefore it is advisable to settle the transfers a couple of days before the deadline.
Types of Taxable Income
The following main types of income are liable to personal income tax:
- Income from employment
- Income from independent personal services
- Income derived from private business
- Income from savings and securities
- Income from the disposal of movable and immovable property
- Miscellaneous income
There are three income tax allowances in Hungary, two of which (the handicap allowance and agricultural allowance) are only valid in highly specific circumstances. The third is the family allowance, as detailed below.
The aggregated tax base can be reduced with the family allowance (Családi Adókedvezmény).
The volume of the family allowance is equal to the fixed allowance amount multiplied by the number of “beneficiary dependent children”.
The calculation of the family allowance takes into account the number of dependent children of the tax payer. In case of 1 or 2 dependent children the allowance is HUF 62,500 per beneficiary dependent child, while in case of 3 or more children the allowance is HUF 206,250 per beneficiary dependent child.
What constitutes a beneficiary dependent child is determined in the so-called family law.
To determine whether or not they are entitled to the family allowance, taxpayers should contact the HR departments of their host companies.
The amount of tax allowance can be split between spouses or life partners.
- For contact details and further information on income tax from the Hungarian tax authorities: Click here