Last updated on: 2 January 2023.
As the end of the year is creeping closer, it is worth starting to prepare for the new year. January is traditionally the season for the introduction of new tax regulations. Read on to find out about the expected changes to taxes in Hungary in 2023.
Starting from next year, the conditions for choosing flat-rate taxation become less strict. The yearly revenue limit of 10 times the current minimum wage (or 50 times, for retailers) will apply no more to your revenue in the year before choosing this tax regime. If you are planning to choose flat-rate taxation in 2023, your 2022 revenue does not matter, only your expected revenue for 2023. (Learn more about the basics of flat-rate taxation here.)
At the same time, flat-rate taxpayers must declare and pay the social security contribution and the social contribution tax not monthly, but only quarterly, by the 12th day after the quarter in question, so by 12 April, July, October, and January. (Learn more about deadlines relevant to flat-rate taxpayers here.)
Billing and invoicing
If you regularly issue bills without a cash register machine or without creating invoices, watch out for new regulations governing the creation of electronic bills. Bills can be created using physical bill booklets or in various invoicing software, and they typically contain less data than invoices. Currently, bills must be handed over physically to the customer. The new regulation is supposed to let you create fully electronic bills while also letting the Tax Authority collect data from billing tools. Watch this space for more information.
Local business tax
Freelancers can choose to pay the local business tax (also called HIPA) not based on their actual revenues but in a tier system. This is relevant for you if your yearly revenue is under HUF 25 million (or HUF 120 million if you are a retailer applying flat-rate taxation).
|Yearly revenue||Tax base for HIPA|
|up to HUF 12 million||HUF 2.5 million|
|between HUF 12-18 million||HUF 6 million|
|between HUF 18-25 million |
or if retailer under flat-rate taxation: between HUF 18-120 million
|HUF 8.5 million|
The actual tax payable will depend on the local rules of the municipality where your business is registered. If your seat and your place of operation is in a different municipality, you pay the same full amount to both municipalities. The main advantage of the scheme (beside the favorable tax itself) is that you have pay the local business tax only once a year, without submitting your tax returns to the municipalities, spending time on calculating the tax base, and figuring out how to split it between the relevant municipalities.
You can apply for this scheme when you are submitting your tax returns for the previous year, for which the deadline is 31 May. In line with this, if you apply this to 2023, you must include your application for the scheme in your 2022 tax returns. KATA subjects, who are normally required to pay the second instalment of HIPA by 15 January of the following year, can make their declaration for choosing the simplified scheme by 31 May.
VAT on newly built residential property remains 5% for 2 more years. Originally it was introduced for projects where the construction permit was issued before 31 December 2022; now that deadline is extended until 31 December 2024.
CSOK (the home purchase subsidy scheme for families) will be available not only for building new homes but also for house extensions. Relevant tax exemptions are also extended.
The minimum wage and the guaranteed minimum salary are normally adjusted for inflation every year, applying from each January. While last year both received a major boost, inflation in 2022 was significant, so another increase is reasonably expected. Knowing the new year’s minimum wage is important for businesses to plan their yearly budget, and for the calculation of other important limits, such as the upper limit of yearly income for flat-rate taxpayers.
UPDATE: The 2023 minimum wage brought a ca. 15% increase. Click here to learn the details.
There is one more change with a significant impact on salaries in 2023. The SZÉP Card, which is one of the most popular fringe benefit elements in Hungary, used to have three “pockets” to cover expenses related to accommodation, catering (hot meals), and leisure. Over the last few years, these pockets were sometimes made interchangeable to better support domestic business in times of pandemic and other hardships.
Starting from 9 January 2023, the pockets of the SZÉP Card are abolished for good. Sums previously wired to the individual pockets can be used for any of the designated purposes with any providers accepting SZÉP Cards, just like any new transfers.
Helpers Finance helps you with taxes in Hungary
Helpers Finance offers accounting and bookkeeping services to small and middle-sized businesses, with a special focus on foreign-owned LTDs. Let us help you navigate bureaucracy and taxes in Hungary so your company may remain compliant and you can focus on what you do best: growing your business!
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