In the following we would like to inform you briefly about tax changes related to personal income tax and contributions in year 2023.
Changes of taxation and social security 2023
minimum wage: HUF 232 000 (gross)
guaranteed minimum wage: HUF 296 400 (gross)
Health service contribution
The amount is HUF 9 600/month (HUF 320 daily), which has to be paid by the natural person after the time he/she spends outside of an ensured legal relationship.
The tax authority informs the individual in 8 days, if he/she will have an obligation to pay the health service contribution, because of the termination of the insurance legal relationship or of the eligibility for health service. If it is more than the amount of 3 months, then the individual’s social security card becomes invalid, and the person supported by social security cannot use the health services free of charge only if he/she reimburse the debt.
The tax authority cancels, on request and with retroactive effect, the payment of the health service tax by a person living abroad, if the individual can credibly demonstrate – especially with a document of the proof of residence and proof of health insurance that
• that he/she has been living outside Hungary for a long time; and
• is covered by the health insurance scheme of the place of residence.
From 1 January 2023, based on the above information, the health insurance authority will cancel the Social Insurance Number of the obliged person living abroad and will close the obligation to pay health service contributions with regard to insurance abroad.
Personal income tax exemption under the age 25
An individual under the age of 25 (hereinafter: young person) may consider the income earned from work as a tax-deductible benefit up to a certain value limit, if his / her monthly income does not exceed HUF 499 952 gross.
If the young person's income exceeds the average earnings, then the personal income tax has to be paid only after the difference.
The discount is valid for the months before the young person has reached the age of 25.
Income tax benefit for mothers under the age 30
A young mother is entitled to this benefit the if she becomes entitled to the family allowance after 31 December 2022 in respect of her unborn child, a child born to her by blood or an adopted child.
The benefit is payable from the month following the month in which the young mother reaches the age of 25 at the earliest and is payable up to the last month of the year in which the young mother reaches the age of 30.
New tax-free benefit for foreigners staying for a short period in Hungary
Income earned under an employment relationship with a public trust performing a public function, a public trust maintained by a public trust performing a public function or another institution of higher education will be tax-free if earned by a person who is a foreigner under the social security rules (e.g. does not have a Hungarian address) and whose stay in Hungary during the period of activity does not exceed 30 days.
The amounts credited to the sub-accounts of SZÉP card by 15 October 2022 can be used until 31 May 2023 with favorable tax treatment. In addition, 15% tax will be deducted from the amount remaining on the SZÉP card.
From 1 January 2023, the sub-accounts of the SZÉP card will no longer exist, so the amount transferred to it can be freely used for the following purposes as defined by law
- accommodation services
- catering services in catering establishments (including catering at the workplace)
- leisure, recreation and health services
The budget remains at HUF 450 000 per year.
The amounts in the three different pockets up to that date will be transferred to the accommodation pocket on 8 January 2023, so that the amounts on each sub-account will be added together and from 9 January only this pocket will be available for transfers.
Family tax allowance for a permanently sick child
From 1 January 2023, the family allowance for a dependent child of a beneficiary who is a permanently ill or severely disabled person will be HUF 66 670 higher per month, so the amount of the allowance after these children will increase by HUF 10 000 converted into tax.
HAS NOT CHANGED
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).
From 01.01.2020 those mothers who were entitled to family allowance after 4 children (for at least 12 years) will exempt from the payment of personal income tax (after the labour income) lifelong, regardless of how old the children are.
Social contribution tax
The scale of social contribution is 13%.
Social contribution should be paid after the following payments:
- Fringe benefit
- Certain defined benefits which are not qualifying as fringe benefit
- Income from interest on loans
- Income extracted from the company
- Income from securities lending
- Entrepreneurial dividend base
- Income from exchange gains
Small business tax
Small business tax rate is still 10%.
Family tax reliefs
The tax base reducing tax relief can be claimed without an income limit
- in case of one child HUF 66 670
- in case of two children HUF 133 330
- in case of three or more children HUF 220 000 after every dependent child
Tax reliefs for those who get married for the first time
Tax base reducing tax relief 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 tax reliefs
The personal benefit is 5% of the minimum wage and can be considered as a discount reducing the consolidated tax base. The personal income tax saving is so now HUF 11.600 per month.
A person with a severe disability should still be considered who is suffering from an illness listed in Government Decree 335/2009 on severely disabled diseases and receives an invalidity allowance or disability allowance for the benefit of the consolidated tax base. The discount can be enforced based on a medical certificate or a decision on disability benefits and disability benefits.
Order of application of tax benefits
- the first is the discount for mothers raising four or more children
- Personal income tax exemption for under the age 25
- personal discount
- discount for first married couples
- family discount.
Certain determined benefits
After the 1.18 times multiplied amount of these benefits the employer also has a 15% personal income tax, 13% Social Contribution Tax
- The part of Szép card which is above the limit
- Gift voucher 1 time/year up to 10% of the minimum wage (maximum HUF 23 200)
- Employer contribution transferred to voluntary pension fund and health fund
- Taxable income given by the employer based on meals or other services related to business travel
- After 20% of company mobile phone usage
- 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)
Tax free benefits
- Safety glasses benefit
- Cost of kindergarten, nursery
- Ticket for sports events and Cultural services up to the amount of the minimum wage
- Commuting to work by own car maximum 15 HUF/km
Takács Gabriella HR advisor
Gubicza Krisztina chartered tax expert
Budapest, 09 January 2023