Hungary

Hungarian personal income tax (PIT) is assessed on the following.

• Domestic-source income.
• Foreign-source income, provided to an individual resident in Hungary.

Income derived from employment activity performed in Hungary can qualify as domestic-source income, even if it is paid from abroad. In the case of income paid from abroad, income tax can be due whether or not the income has been transferred (e.g. electronically, by bank-to-bank transfer) or brought into the country in cash.

Personal income tax (PIT) rate

The PIT rate is 15% in the case of nearly all types of income.

There are three distinct ways how the tax base is calculated. The first one is the consolidated tax base. The consolidated tax base consists of

• employment income
• income from independent activity including rental income (90% of the gross income or the gross income reduced by the deductible costs),
• other income.

In the case of the consolidated tax base, the tax allowances are deductible. The following tax allowances are available:

• Family Tax Allowance after dependent children,
• Allowance for Young Couples in First Marriage,
• Allowance Granted to Mothers Raising Four or More Children,
• Personal Allowances with a severe disability,
• Allowance for Young People Under the Age of 25 Years,
• Allowance for Mothers Under the Age of 30.

The second option of the tax base calculation is applicable in the case of fringe benefits and other specific benefits. In the case of most fringe benefits, the income is subject to personal income tax and social tax that is payable by the employer. The most common, beneficially taxable fringe benefit is the SZÉP Card, a special restaurant and hotel voucher.

All other forms of income elements are taxable separately. Such income elements include income from dividend, interest, controlled capital market transactions, capital gains, sale of movable and immovable property etc.

The income realised from long-term savings accounts is subject to taxation when the account is terminated. The personal income tax rate is 15% if the savings account is terminated in the first three years after the conclusion of the contract and 10% in the next two years. No personal income tax needs to be paid on the realised profit after five years.