Hungary

The consolidated tax base is the taxable gross income received as income from dependent personal services, income from independent personal services, and all other income that is determined as 'other income' in the PIT Act, or for which the PIT Act contains no provision.

Employment income

The gross income of employees includes all cash remuneration and most personal expenses paid by the employer (e.g. overseas allowances, insurance, pension, tax reimbursements, tax equalisation payments). Housing can still be provided tax-free by either the foreign or the Hungarian company if certain conditions are met.

In recent years, there were more possibilities for companies to provide benefits in kind to individuals with employer taxation; however, the taxation of these kind of benefits has been significantly changed. Most of the benefits that were subject to a zero or low tax rate lost their tax advantage and became taxable in the same way and at the same rate as wage income.

Currently, the Széchenyi Recreational Card (SZÉP Card as per its abbreviation in Hungarian), trade-union-supported recreation, and benefits provided by cooperatives to their members can be provided as ‘fringe benefits’, and only a limited group of benefits can be provided as ‘other specific benefits’ (e.g. private us of company phones, meals on business trips, gift of small value three times a year up to 10% of the minimal wage [HUF 29,080 in 2025]).

In addition to the above, from 1 January 2025, housing allowance given to employees under the age of 35 can be considered as ‘fringe benefit’ as well up to a maximum of HUF 1.8 million annually. Please note that any amount granted over the before-mentioned maximum amount is taxable as ‘other specific benefits’.

In case of a ‘fringe benefit’, as per the main rules, the tax base is the fair market value of the benefit on which 15% PIT and 13% social tax are payable by the benefit provider.

In case of ‘other specific benefits’, the tax base is 1.18 times the fair market value of the provided benefit on which 15% PIT and 13% social tax are payable by the benefit provider.

Please note that as of 1 January 2024, in case of fringe benefits and other specific benefits, these income elements are reportable by the payers on a quarterly basis until the 12^th day of the month following the quarter instead of a monthly basis.

However, there are still some benefits that could be provided tax free. For example, the kindergarten fees reimbursed by the employer and the non-redeemable tickets/season tickets (excluding vouchers) for cultural and sport events up to the limit of the minimum wage can be provided as tax-free benefits. The use of company cars, bicycles, and e-bikes may also be provided as a tax-free benefit.

A recent addition to these benefits is the tax-exempt gift of bottled wines or their consumption at business lunch, team building events for employees if the wine was purchased from a Hungarian vineyard directly.

In addition to the above, from 1 January 2025, the employer can provide tickets / seasonal passes to zoos and the usage of its own gym tax-free to its employees.

SZÉP Card benefit 

According to the general rules, the benefits granted by the employers, up to the recreational amount determined in the PIT Act, are taxable as fringe benefit, whereas the part exceeding this amount is taxable as ‘other specific benefit’. The above-mentioned yearly recreational amount that can be given as a fringe benefit is HUF 450,000 plus HUF 120,000 separated in a sub-account.

After the benefit (granted by the employer to SZÉP Card up to the above-defined recreational amount that can be treated as fringe benefit), 15% PIT and 13% social tax is payable. Please note that the benefit granted in excess of the above-mentioned recreational amount will continue to be taxable as ‘other specific benefit’. In this latter case, the tax base is 1.18 times the fair market value of the provided benefit on which 15% PIT and 13% social tax is payable.

As of 1 January 2023, the previous sub-accounts of the SZÉP Card were eliminated, and their balances were pooled into one sub-account that can be used freely for restaurant, hotel, or entertainment services and activities. However, from 1 January 2025 a new sub-account was created called 'Active Hungarians'. The maximum amount that can be given for such purpose is HUF 120,000 on top of the original HUF 450,000 amount and can be used for sport activities.

Also of 1 January 2025, 50% of the SZÉP Card’s balance at 1 January 2025 and of the amount transferred to it in 2025 (maximum 50% of HUF 450,000 in total annually) can be used to pay for home renovation costs. The detailed rules of use of this benefit and the Active Hungarian sub-account are yet to be clarified in a not yet announced government decree.

Cost reimbursement in connection with remote working

There are two main types of benefits that can be provided tax-free to remote workers:

• Flat rate financial support for the remote working period:

• The employer can provide remote workers with a cost reimbursement on a monthly basis in cash tax-free, but only up to the maximum of 10% of the monthly minimum wage. The amount of the minimum wage is HUF 290,800 in 2025. Consequently, the maximum cap of the benefit is HUF 29,080 per month in 2025.
• HUF 29,080 is the upper limit of the monthly benefit. The actual amount that can be granted tax-free depends on the number of remote working days in the given month. The part of the maximum cap that can be paid tax-free is in proportion to the time of remote working in the given month (even one hour of work remotely per day makes that day a remote working day, so that day can be taken into account when calculating the actual amount of the reimbursement).

• Alternative tax-free benefits granted by the Personal Income Tax Act in case of remote working (if the flat rate financial support is not used):
• Reimbursement of the purchase price of the IT equipment that is necessary for remote working.
• Reimbursement for the monthly Internet subscription fee. The full fee can be reimbursed tax-free regardless of how many working days were spent with remote working in the given month by the employee.
• Reimbursement for real estate renting cost (if any), as well as heating and electricity costs, but only to the extent that it can be attributed to the remote working.

Cost reimbursement of commuting to and from work

As of 28 January 2023, the tax-free amount of reimbursement for commuting to and from work has been doubled according to the 16/2023. (I.27.) Government Decree.

According to the applicable provisions of the regulation, in the case of daily commuting to and from work across city limits by car, the employee can receive up to HUF 30 per kilometre tax-free reimbursement from one's employer.

The employer is required to reimburse the cost of commuting to and from work by car up to 60% of HUF 30 per kilometre (i.e. HUF 18 per kilometre) if:

• there is no public transport between the employee's place of residence and the place of work
• due to the employee's work schedule, he or she cannot use public transport or only with a long wait
• the employee is unable to use a public transport vehicle due to mobility limitations or severe disability in accordance with the government decree on the classification and review of severe disability and the rules for the payment of disability support, or

• the employee has a child who is in nursery care or who studies in a public education institution under the age of 10.

However, it is important to note that the employer remains obliged to reimburse 86% of the cost of commuting by public (intercity, but not local) transport, and may reimburse 100% of such a cost tax-free.

As of 24 March 2023, the range of types of tickets and passes to be reimbursed by the employer in the framework of cost reimbursement of commuting to work was expanded. Thus, the employer reimburses at least 86% of the price of the intercity national pass, intercity county pass, as well as other passes with less territorial validity than the national pass, which are valid in a specific area, and are also suitable and necessary for daily commuting to and from work according to the 91/2023. (III. 23.) Government Decree. Under the new rules, electronically purchased tickets and passes do not have to be printed for the reimbursement process; their electronic version shall also be accepted by the employer.

Equity compensation

Stock option plans are more and more common in Hungary, mostly at local affiliates of international companies who expand their global plans to Hungary.

Income from stock options must be classified based on the relationship between the provider of the income and the recipient, or based on their relation to any other parties. In general, since the recipients would have an employment relationship with the Hungarian affiliate, the income would be classified as employment income even if the options were provided by their foreign mother company. Taxation of stock options cannot be qualified as non-cash benefits.

Income from stock options is not recognised at the time when the option is granted to the employee, but first when the individual exercises an option (transferable options may be taxed differently). The tax rate applicable is 15%. The income realised may also be subject to social security contributions (18.5%) plus social tax (13%) or just social tax (13%) depending on the individual's social security positions, the provider, and the content of the plan.

Capital gains

Capital gains are subject to a tax rate of 15%. If certain conditions are not met, an additional 13% social tax is also payable.

The income from capital gains should be reported in the annual tax return, and the taxes on capital gains income have to be paid when the annual tax returns are filed.

Gains from crypto transactions

The income from crypto transactions includes the profit from capital gains or mining or any other transaction with crypto assets. 

The income has to be determined yearly, and the individual needs to deduct the yearly cost incurred from the yearly gross revenue. Thus, according to the rules, the income is not calculated by transactions but yearly based on the positive and negative cash flow. The tax rate is 15%, and there is no additional tax or social security charge. The income must be calculated by the individual on a yearly basis and must be paid by the deadline for the submission of the yearly tax return.

Tax equalisation is also available since 2022, meaning that if one declared an overall loss on their crypto transactions in the last two years of the subject tax year, that loss can offset the tax payment obligation on the profit realised in the subject year.

Dividend income

Dividend income is taxable at 15% PIT. An additional 13% social tax is payable on dividend income if certain conditions are not met, but only up to a relatively low cap.

Dividend income should be reported in the annual tax return, and the taxes on foreign-sourced dividend income have to be paid when the annual tax returns are filed.

The tax on income from dividend income can be reduced by credit for foreign withholding taxes (WHTs) on dividends paid from double tax treaty (DTT) countries up to the rate stipulated in the treaty.

Interest income

Interest income is also subject to tax at 15%.

In certain cases, the tax rate is 0% on interest received from investments that have been kept for at least five years, and 10% on investments that have been kept for three years on a 'long-term investment account'. The qualifying criteria are stipulated in the law.

As of 1 July 2023, a new rule has been introduced in connection with the taxation of interest income. According to the 205/2023. (V.31.) Government Decree, an additional 13% social tax will be payable on interest incomes derived from instruments purchased after 1 July 2023 and earned by private individuals. 

The affected interest incomes are the following:

• Interest credited on bank deposits and payment accounts.
• Interest on fixed-term deposits.

• Interest on publicly traded corporate bonds and foreign government securities, discount treasury bills, and the profit realised on their sale or redemption.

• The yield of the investment certificates of public investment funds (except for real estate funds) and the profit realised when they are sold or redeemed.

Interest income should be reported in the annual tax return, and the taxes on interest income have to be paid when the annual tax returns are filed.

The tax on income from interest income can be reduced by credit for foreign WHT on interest paid from DTT countries up to the rate stipulated in the treaty.

Rental income

If a private individual who lets one's property does not qualify as a private entrepreneur, the rental income is taxable as part of the consolidated tax base. Private individuals are able to decrease the rental income they earn by the rental fees they pay for residential property in another municipality, provided that the rental period exceeds 90 calendar days and the costs of living are not reimbursed for them.

The fee charged by the lessor to the lessee for services provided by other persons in relation to the use of the property, purchased from such person (in particular public utility services) in proportion of use, shall not be treated as revenue.

Expenses supported by invoices can be deducted from the rental revenue, and, in this case, individuals can account depreciation against the rental income that they earn. Alternatively, a lump sum of 10% can be deducted.

Special rules for certain types of equity income

Dividend, interest, or capital gains income from a 'company in a country with low tax rate', or interest income from a 'non-treaty country or non-European Economic Area (EEA), non-Organisation for Economic Co-operation and Development (OECD) member state country', are mostly classified as 'other income' and thus part of the gross consolidated tax base. Other income is also subject to 13% social tax.