Social security contributions
The social security contribution base is the gross income paid to the employee. The employer's contribution rate (so-called 'social tax') is 17.5% from 1 July 2019. The employees' contribution rate is 18.5% (10% pension contribution, 7% health insurance contribution, and 1.5% unemployment contribution).
15% of the unused amount of the child tax base allowance can be deducted from the health insurance and pension contributions.
The contributions are payable at least on the minimum wage, which is HUF 149,000 per month (the guaranteed minimum wage for those employed in jobs requiring at least secondary level qualifications or vocational training is HUF 195,000).
Employers, and also individuals who are paid by a non-Hungarian company, are liable for both social security payments and the electronic filing of monthly social security declarations.
As a general rule, dependent persons over 18 years of age are only eligible for healthcare services if they pay healthcare service contributions. Uninsured persons are liable for monthly contributions of HUF 7,500 (as of 2019).
Social tax allowances
Only one type of allowance can be applied on a given employee; however, it is the employer's decision which is the most beneficial based on the given circumstances.
With these allowances, the government intended to reduce the employment cost relating to the employees like jobseekers, jobseeker mothers with three or more young children, individuals with reduced ability to work, researchers, etc.
With employment of the above employees, the employer can apply social tax and training fund contribution allowances. The eligibility periods of the allowances and their exact amounts depend on the employee.
Social security contribution of foreign nationals
In order to determine whether a foreign national should become subject to Hungarian social security contributions, both the local and international rules should be carefully reviewed. One should count with Hungarian social charges typically when the foreign nationals:
- are employed locally by a Hungarian employer in the territory of Hungary
- work in Hungary as employees of a non-Hungarian employer and are nationals of a European Union (EU) member state or of a country that has a social security treaty with Hungary but cannot remain covered by the social security system of their home country, or
- are third-country nationals assigned to Hungary from a non-EEA country and the length of their assignment exceeds two years.
Healthcare tax is replaced by social tax
From 2019, the healthcare tax is replaced by the social tax, meaning that, from 1 January 2019, those incomes that were subject to healthcare tax (e.g. separately taxed income including dividend, income from capital gain) in 2018 are subject to social tax in 2019. There is only one social tax rate (19.5%; 17.5% from 1 July 2019), but for certain types of income (e.g. dividend, capital gain), the payable amount (if any) can depend on the amount of income taxable on the individual’s side during the tax year.
As for the income from employee equity plans, whether social security contributions (18.5%) plus social tax (19.5%; 17.5% from 1 July 2019) or only social tax (19.5%; 17.5% from 1 July 2019) is payable on such income depends on the employment structure and the content of the plan.
In case of a fringe benefit, the tax base is the fair market value of the benefit; however, in case of a defined benefit, the tax base is 1.18 times the value of the benefits provided.
Value-added tax (VAT)
VAT is payable on sales of goods and the supply of services at the general rate of 27%. Reduced rates of 18% and 5% are applicable for some goods and services (see the Other taxes section in the Corporate tax summary for more information).
Net wealth/worth taxes
There are no net wealth/worth taxes in Hungary.
Inheritance, estate transfer, and gift taxes
The general inheritance and gift tax rate is 18%, and a preferential 9% tax rate applies to residential property. The transfer of property without consideration between lineal relatives (including the spouse of the deceased) is tax exempt. There is a preferential tax rate for residential property in case of estate transfer tax as well. The estate transfer tax rate is 4% or 2%, depending on the value of real estate. In case the value of real estate is maximum HUF 1 billion, then the tax rate is 4%. In relation to the portion of the value that exceeds HUF 1 billion, the applicable rate is 2%. Nevertheless, the amount of the estate transfer tax cannot exceed HUF 200 million per property.
Property and land taxes
Hungarian municipalities have the right to levy property tax and land tax at their own discretion until the relevant caps are reached (see the Other taxes section in the Corporate tax summary for more information).
Company car tax
The measure of the company car tax depends on the power in KW and the environmental classification of the company car.
Company car tax may also be payable if company car costs are borne by a Hungarian company or if individuals use their own cars for business purposes and are reimbursed for the costs.
The use of company cars for private purposes does not incur an additional PIT liability.