Tax changes from 1st July 2019

Social contribution tax, Ekho, KATA

The part of social contribution tax (wage, mandate, certain defined benefits, representation) and simplified public burden sharing contribution (ekho) levied on employers has been reduced from 19.5% to 17.5%.

In connection to this, the determination rules of consolidated tax base of Act on personal income tax have also been modified. If the natural person is obliged to pay social contribution tax after a given income, he/she has to take the 85% of the determined income as a base in the calculation (instead of the previous 84%).

In conjunction with the above-mentioned, the benefit base of full-time KATA taxpayers has also been modified, since the ratio of social contribution tax within the itemized public burden (KATA) decreases, therefore the tax part of individual contribution increases, so the base of cash benefits (e.g. sickness benefit, child care benefit) increases as follows:

in case of

50 THUF/month KATA payment, the benefit base is 98 100 HUF (instead of the previous 94 400 HUF);

75 THUF/month KATA payment, the benefit base is 164 000 HUF (instead of the previous 158 400 HUF);

Tax on advertisement

Tax on advertisement has been suspended from 1st July 2019 to 31st December 2022, it’s rate has been determined as zero percentage (instead of the previous 7.5%).

This also means that taxpayers being subject to the law have neither registration, nor tax reporting obligation in this period, however payable tax for year 2019 has to be determined time-proportionally based on the tax payment obligation of the period preceding 1st July 2019.

Corporate tax, Income tax of energy suppliers, Innovation contribution

With regard to corporate tax, income tax of energy suppliers and innovation contribution, the tax advance payment completion (tax uploading) obligation due until 20th December of the given year has been abolished. 

According to the transitional regulation, taxpayers can voluntarily complete their corporate tax in tax year 2019 so to dispose of supporting spectacular team sport or film within the frames of tax advance payment completion.

In case of taxpayers to whom the tax year differs from the calendar year, the tax advance payment completion obligation is to be applied for the last time in that tax year when the deadline of tax advance payment completion precedes the acceptance of law modification and its entry into force (12th July). 

Due to the general nature of our information, this can’t be considered as a decision-justifying consultation. With regard to this, please be so kind as to contact our colleagues with your specific questions in connection with this information letter.

Budapest, 01 July 2019

Gubicza Krisztina chartered tax expert

Takács Gabriella HR-leader