Hungarian Tax Changes in 2018 – Good to Know Part 2.

Our second article will follow up with the personal side of the Hungarian taxation. We will cover the personal income tax, the social security legislation and the local taxes as well.

Changes in Personal Income Tax and Social Security Contributions

• Tax exemption granted by the employer:
  In the first two years of employment - which is to be expected from 2018 - the amount of housing allowance that is tax-free for the employer, however, increases from 40% to 60% of the minimum wage.

• The lease:
  As of 1 January 2018, no healthcare contribution of 14% will have to be paid to individuals renting the apartment after their letting of real estate over 1 million forints per annum. Another change is that, for example, if one of the spouses completes a tax liability related to a property owned jointly by spouses, you can also account for your partner's name.

Changes in Social Security Legislation

• As announced, the social contributions tax rate will decline to 19.5 per cent next year, while the minimum wage will rise to 138 thousand forints and the guaranteed minimum wage will rise to 180 500 forints.
• In parallel with the decrease in the social contribution tax rate, the former rate of 22% healthcare contribution decreased to 19.5%.
• According to the interim changes, the amount of the health care contribution increases from 1 January 2018 to 7,710 forints per month (237 forints per day) to 7320 forints (244 forints per day).
• There is also a 14% loss of healthcare contribution to the rental of real estate.

Changes to Local Taxes

• Forwarding company information:
  From 1 January 2018, the state tax authority will transmit the data received from the companies created by the court of registration electronically to the local tax office of the company. As a result, the new company can fulfill its notification obligation in a one-stop-shop system, not only to the state tax authority but also to the local tax authority of its headquarters.

• Payment of the prepayment:
  Starting from the day following the promulgation of the amending law, the taxpayer may fulfill its future local tax liability before its due date. In this case, a tax return must be submitted with the tax to be paid, indicating the tax advance. The declaration cannot be corrected by self-checking.