Tax and social security changes 2018

Minimum wage

minimum wage                      HUF 138,000 (gross)

guaranteed minimum wage    HUF 180,500 (gross)

Personal income tax

Tax rate is uniformly 15%, which is applicable not only for income included in the consolidated tax base, but income acquired by every other legal title (e.g. interest, dividend, property sale).

Change: The option for the tax assessment by the employer is withdrawn from 2018, thus the employer cannot produce the employees’ tax accounts neither for 2017. In the future individuals can only set out their tax by self-assessment taxation.

Social contribution tax

The scale of social contribution tax is 19.5% instead of previous year’s 22%.

Healthcare contribution

19.5% instead of previous year’s 22%.

The lessors that lease property permanently, do not have to pay the 14% healthcare contribution for more than HUF 1 million income.

Tax reliefs

Discount for families

The tax base reducing discount can be claimed without an income limit

• in case of one child HUF 66,670
• in case of two children HUF 116,667
• in case of three or more children HUF 220,000 after every dependent child

Discount for those who get married for the first time

Tax base reducing discount is HUF 33,335 /month. One is entitled for this from the first day of the following month of the wedding, through 24 months.

Personal discount

Amount equal to the 5% of the prevailing minimum wage can be taken into account in case of severely disabled individuals, which reduces the tax base. It can be validated from the starting month of disability until this disability continues.

Taxation of dividend

Payable tax scale of dividend is 15 percentage. The 14 percentage healthcare contribution obligation is still reclaimable, as long as the amount of health insurance contribution of the individual does not reach the limit of HUF 450,000.

Cafeteria

Fringe benefit

Employer has a 15% income tax and 14% healthcare contribution paying obligation after a 1.18 times multiplied amount of the benefit.

• Széchenyi card (maximum HUF 450,000)
• Cash benefit max. HUF 100,000/year

Certain determined benefits

After the 1.18 times multiplied amount of these benefits the employer also has a 19.5% healthcare contribution paying obligation, as well as the 15% income tax.

• Erzsébet voucher
• Workplace meals
• School starting support
• Season ticket for local transportation (with invoice issued for the name of the employer)
• Employer contribution transfered to voluntary pension fund
• Employer contribution transfered to voluntary health fund
• Amount transfered to employer pension fund
• School system training, in case the employer obliges the employee
• Taxable income given by the employer based on meals or other services related to business travel
• After 20% of company mobile phone usage
• (Group) insurance concluded for the benefit of more than one individual (entitlement based on job activity, position)
• Present of small value, 3 times per year to the employee, close relative (10% of the minimum wage)
• Such taxable income given through free or discount goods, services, for which more than one individual is entitled at the same time and the employer cannot determine the acquired income of the individuals.
• Furthermore, incurred costs related to free events, organized for more than one individual (including business partners too), if it is ascertainable from the circumstances of the benefit, that it is predominantly aimed for catering, leisure program (coffee, tea, juice consumption of own employees is also included) (Point b.) of Article 3. of 70§ of Personal Income Tax) 
• The amount exceeding the tax discount value limit of the fringe benefit.

Tax free benefits

• Safety glasses benefit
• Housing loan repayment support (maximum HUF 5,000,000 in 5 years)
• Free computer usage
• Ticket for sports events: This benefit can be given without an upper limit either in the form of a voucher that can be spent on sports event ticket or upon submission of the invoice that certifies the payment of the ticket.
• Cultural service: maximum HUF 50,000 /year (theatre ticket, concert ticket, museum ticket)
• Risk insurance until 30% of minimum wage
• Cost of kindergarten, nursery
• Lodging contribution: in the first 2 years maximum HUF 82,800
• Student loan repayment up to the instalment, but maximum 20 % of minimum wage (HUF 27,600)
• Commuting to work by own car maximum 15 HUF/km (previous years 9 HUF/km)

Healthcare service contribution

The scale of it is HUF 7,320/month, which has to be paid by the individual after every uninsured period of time.

Budapest, 15th January 2018

Takács Gabriella HR advisor

Gubicza Krisztina chartered tax expert