The Hungarian labour market is increasingly
characterised by an influx of foreign workers, which intensified after the
outbreak of the Russian-Ukrainian war. However, there are often tax issues for
foreign workers, such as what tax benefits they are entitled to.
The issue of entitlement to family allowances is discussed below.
Foreign individuals working in Hungary are entitled to claim family tax allowances if they would be entitled to a child benefit for their family members if they were Hungarian citizens. They will be the beneficiaries of the family tax allowance.
A dependent child is a child who, under the Hungarian
Act for Family Supports, would be considered in the calculation of the child
benefit for another child if he or she were a Hungarian citizen.
The rules on family tax allowances regulated in the Hungarian Income Tax Act are to be applied therefore for them too.
However, foreign individuals can only claim family tax allowances in Hungary if they do not receive the same or similar tax allowances for the same period in the other country where their income is taxable (considering double tax treaties in order to avoid double taxation).
To be able to claim the family tax allowance in Hungary, the non-resident individual must have a taxable income in Hungary equal to 75% of his or her total income earned anywhere in the world during the tax year. All income should include business income, dividends, income from real estate and retirement as well.
Therefore, if these conditions are met, the foreign individual is able too, to claim the family tax allowance in Hungary.
