Family tax benefit: the child benefit in Hungary relevant for salary calculation

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Family tax benefit: the child benefit in Hungary relevant for salary calculation

In Hungary, there are many forms of child benefit. The two most important are the family allowance and the family tax benefit. The basis of both is how many children someone takes care of, either as a parent or a guardian, and how many of them are eligible for child benefit. However, for calculating salaries, the family tax benefit is what matters most.

It is always the parent’s task to be up-to-date on how many of their children are entitled to child benefit. If you are not sure, you can ask your / your employer’s accountant to direct you to the relevant authorities.

Dependent and entitled children

If you have sons and daughters, you have to consider how many of them are dependent on you (meaning you take care of them financially), and how many of them are actually entitled to receive child benefits. (For specific examples, scroll to the end of the article.)

1. Children entitled to family tax benefit in Hungary

  • A fetus from the 91st day of pregnancy till the month preceding childbirth
  • Minor children (under the age of 16)
  • Dependent children under the age of 20 still attending secondary education (needs verification from school)

2. Dependent children

It is important to indicate all your dependent adult children to the authorities and your / your employer’s accountant if you have other, still entitled children, since based on them the family allowance and the tax benefit received for the entitled children is proportionately increased.

Hungarian regulations consider dependent children:

  • A fetus from the 91st day of pregnancy till the month preceding childbirth
  • Minor children (under the age of 16)
  • Children under the age of 20 still attending secondary education (needs verification from school) AND still receiving family allowance
  • Children who are attending higher education AND have not yet received a degree there or anywhere else, AND do not receive salary that is higher than the current minimum salary regularly (in 3 successive months).

If you want to know whether the child benefit of your minor children can be increased based on your dependent adult children, consult your / your employer’s accountant.

Receiving family tax benefit

The family tax benefit is relevant for employers and employees, as it increases the net salary by reducing the employee’s personal income tax and contributions. Based on the number of children, the parent’s net salary can raise by HUF 10,000, HUF 17,500, HUF 33,000, or even more (ca. EUR 33, 60, 110, respectively).

Before applying the family tax benefit to the salary, parents should decide whether one of them will receive it, or they are sharing it equally or in any other proportion.

If the parents of a child are divorced, they can still decide to share the tax benefit – in that case they should give their written consent to the authorities. At the same time, the new spouses of the parents also become eligible.

Family allowance

Family allowance is paid directly by the state to the parents / guardians of children entitled to this support. As such, it is independent from the employer or being employed. Its sum depends only on the number of entitled children, regardless the parents’ salary.

Child benefit for foreigners in Hungary

Foreigners working in Hungary can also apply the family tax benefit if at least 75% of their overall income is to be taxed in Hungary, and they officially declare this.

Just like with social security, you can receive child benefit in only one EU country at the same time. That is, if you are eligible both in Hungary and in another EU country, you have to decide and declare where you want to apply for it – and, of course, let your / your employer’s accountant know.

Beside the above-mentioned declaration,

  • EEA citizens (EU, Iceland, Lichtenstein, Norway, Switzerland) need to have a registered address in Hungary;
  • non-EEA citizens need to have a work-permit for at least 6 months, or a work-permit valid for the purpose of intra-corporate transfer for at least 9 months;
  • the entitled children must be living in the same household in Hungary as the tax-payer;
  • the entitled children must be either under the age of 3, or, if they are between the age of 3 and 16, they must attend kindergarten / school in Hungary.

Examples for salary calculation

In our salary calculator, you have the option to indicate how many children you have. Let’s see an example of determining whether your children are dependent and/or entitled to the family tax allowance!

You have 8 children.

  • Child 1: Age 26, already working, living on their own. Not entitled, not dependent.
  • Child 2: Age 24, already working, living with you. Not entitled, not dependent.
  • Child 3: Age 22, not working, not studying, living with you. Not entitled, not considered dependent.
  • Child 4: Age 19, attending university, living with you. Not entitled, but dependent: increases child benefit.
  • Child 5: Age 19, attending university, living in a dorm. Not entitled, but dependent: increases child benefit.
  • Child 6: Age 19, attending high school, living with you. ENTITLED, dependent.
  • Child 7: Age 16, attending high school, living with you. ENTITLED, dependent.
  • Child 8: Age 8, attending primary school, living with you. ENTITLED, dependent.

In the field “Nr of children entitled for allowance”, you write 3, as you have 3 dependent entitled children.

In the field “Nr of dependent children”, you write 5, as you have 5 dependent children.