Changes to taxation in Hungary in 2022

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Changes to taxation in Hungary in 2022

We have already written about most changes to taxation in Hungary 2022 – most of which are tied to the ongoing pandemic and the government’s efforts to increase the purchase power of salaries while also creating a more favorable business environment for companies. Now see a summary of the changes, with links to the more detailed descriptions.

1. Minimum wage increase from 1 January 2022

To compensate the worldwide negative effects of the pandemic on the purchase power of wages, both the gross minimum wage and the guaranteed minimum salary have been increased significantly, to HUF 200,000 (ca. EUR 550) and HUF 260,000 (ca. EUR 720), respectively. Since some benefits are tied to the minimum wage, they have increased too. These include child care allowances and unemployment benefits. Learn more here.

2. No personal income tax under 25 years

To provide further financial support to young people, persons under 25 years of age are not paying personal income tax starting from January 2022. Since personal income tax takes 15% off the gross salary, this is a major raise to young people without any extra burden to the employer. This tax benefit is available to everyone working and paying taxes in Hungary, and for all kinds of income, including regular employment, company operation or part-time jobs (as well as jobs for student workers who might work only a few hours in any given month). Learn more here.   

3. Tax refund to families with children

While families raising children receive various benefits, now parents (or guardians) can also get back the personal income tax they paid in 2021. The refund is available to every person who was eligible for the family tax allowance (while the family tax allowance must be “shared” among guardians). Again, this tax refund is also available for all kinds of income, including employment or company operation. The refund is supposed to be automatic if your bank account number is known to the Tax Authority, but you can also apply for it separately, with your yearly tax returns the latest (due by 20 May each year). Learn more here.

4. SZÉP card in spring 2022

The SZÉP card is one of the most important fringe benefits in Hungary. It is relevant for taxation because funds sent to an employee’s SZÉP card are taxed differently than regular salaries. SZÉP card funds can regularly be used for hot meals, leisure, or accommodations, but restrictions were already relaxed last year because of the pandemic.

This year, from 1 February through 31 May (or even until later if the scheme gets extended), funds in all “pockets” can be used for buying any kind of foodstuff as well. If you are buying a mix of items, make sure to separate them before you get to checkout, because you can only pay for food with the SZÉP card. Also, watch out for online purchases and self-service checkout machines, because they might not accept SZÉP cards in all stores. You can always ask the shop assistants about your options. Learn more here.

5. Social contribution tax reduced to 13%

While the above are serious benefits mostly to employees, it is also important not to overburden employers. In line with this, parallel to the increase of the minimum wage, payroll taxes have been reduced to just 13%. In fact, it is the social contribution tax that is reduced from 15.5% in 2021 to 13% in 2022, while the vocational training levy (formerly 1.5%) is integrated into the social contribution tax (which means it has practically been abolished). Learn more here.

The reduction of the social contribution tax also affects KATA and flat rate tax payers. While they do not pay this tax itself, social contribution is integrated into the contributions they do pay. Learn more here.

6. Flat rate taxation available to more freelancers

Flat rate taxation has become more widely available starting from 2022. If a freelancer’s yearly revenue is under 10x the yearly minimum wage (currently HUF 2,400,000, which is ca. EUR 6,600), or 50x the yearly minimum wage if their business activity is retail (currently HUF 10,000,000, which is ca. EUR 28,000), they can choose flat rate taxation, which offers various advantages. Learn more here.

7. Local business tax remains capped at 1%

Local business tax is determined by the municipality where the registered seat and other sites of your Hungarian company are located, but it is normally capped at 2% of the company’s revenue. To support companies during the pandemic, in 2021 the local business tax was capped at 1% of a company’s revenue, and this was extended to 2022 as well. Learn more here.

8. Taxing cryptocurrencies

Taxing cryptocurrencies is a new area of legislation. Just like before, you only need to pay taxes when you exchange your cryptocurrencies for “traditional” currencies such as euros or forints. However, from 2022, social contribution tax (13%) will no longer apply to the exchange; it will only be subject to the 15% personal income tax. Moreover, investors will be able to deduct their losses from their tax base. Learn more here.

Need an accountant? We are at your service!

Does your Hungarian company need an accountant that is always on the top of latest regulations and changes to taxation, and can support informed decisions and the development of your business strategy with precise bookkeeping and informative reports? Helpers Finance offers just that!

The Helpers Team has 15+ years of experience in providing assistance to foreigners in Hungary, which includes various kinds of business support as well as accountancy. Get in touch today, and let us discuss how can we support you best.

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