This summer, the tax law has changed at several points, which also affect private individuals, the summary of the most important amendments are summarized as follows.
Interest Tax
In addition to the 15 percent personal income tax,
a 13 percent social security contribution was introduced as of 1 July 2023,
payable on interest on deposits and on the yields of certain securities. The
new interest tax is payable on interest income earned from the date of entry
into force of the regulation. Examples of taxable income subject to social
contributions are
- for demand deposits, the pro rata interest income
accruing on or after 1 July 2023
- in the case of a fixed term bank deposit, the interest
rate on bank deposits placed on or after 1 July 2023
- in the case of collective investment securities
(e.g. units), the income realised on the sale of securities acquired on or
after 1 July 2023 (similar securities acquired earlier are exempt from the
social security contribution)
- for income from insurance, income from insurance
concluded on or after 1 July 2023 may be taxable.
However, some forms of investment are not covered
by the new obligation:
¬ income from investments or savings on which no interest tax is payable
under the Personal Income Tax Act (e.g. securities issued after 1 June 2019 and
placed with the general public as the target market for investors, listed
shares, savings placed under a Permanent Investment Contract under the conditions
applicable to it, certain insurance policies after the expiry of the period
specified in the Act)
¬ state aid granted under the Law on Hous-ing Savings Banks and interest
paid (credi-ted) on the aid and on the housing savings deposit
¬ baby bond
¬ interest income from units of the real estate fund.
Changes affecting fiduciary trusts and private foundations
The tightening of trust rules will reduce the tax
advantages of trusts and private foundations. The tax exemption for
the transfer of assets to the trusts will be abolished.
Previously, the assets placed in trust by an individual in the case of
fiduciary trusts and, similarly, in the case of private foundations, the
transfer of assets by the founder and the settlor were subject to tax free
revaluation (so-called ”tranfer on market value"). The resulting
revaluation difference will therefore become taxable in the future (from the
60th day after the publication of the legislation) and will be subject to tax
reporting. However, the tax liability can be deferred and paid in instalments
over a period of 3 years. The private individual who transferred the property
may choose to assess the tax in three equal instalments, the first instalment
being declared and paid as an obligation for the tax year in which the property
is settled, and the second and third instalments as an obligation for the
following two tax years.
The new
rule will also apply to property settlements made after the entry into force
and to cases with still pending registration at the time of entry into force.
It has been clarified what is considered a dividend for the purposes of
the Income Tax Act between the fiduciary trusts and the
private foundation, thus bringing them into line with the accounting rules.
¬ In the case of a fiduciary trusts, a
dividend is the value of the assets distributed by the trustee to the
beneficiary or to the individual transferring the property, charged to a
reserve in accordance with the accounting rules.
¬ In the case of a private foundation, a dividend is deemed to be the
value of the assets distributed in an amount not exceeding the value of the
accumulated taxable profit according to the accounting rules.
Confirmation of earlier amendments
As of 1 August 2023, the following measures, previously announced in the
Emergency Government Decree, will become law:
¬ The benefit for mothers under 30 years of age, to which a young
mother who is also entitled to a family allowance under the Income Tax Act in
respect of her biological or adopted child or foetus is entitled. In 2023, the
benefit will be up to HUF 499,952 per month, which means tax savings of HUF 74,993
and could result in tax free income of up to HUF 5,999,424 per year. However,
beneficiaries are not exempted from the 18.5 percent social security
contribution.
¬An additional family allowance for families with permanently sick or
seriously disabled children. The family allowance is payable at the rate of
HUF 66 670 per month of entitlement and per dependent beneficiary.
¬ The merger of the subaccounts of the Széchenyi Recreation Card, which
has left only the accommodation pocket, which continues to function as the sole
account of the SZÉP Card, regardless of the card issuer. - It is worth
mentioning here that, according to the Government's emergency decree of 19 June
2023, the SZÉP card can be used temporarily for the purchase of food between 1
August 2023 and 31 December 2023. Another favourable amendment for this period
that employers may also transfer a one off HUF 200 000 benefit to the SZÉP
card.
¬Increase in the amount of the allowance for commuting from 15 to
30 Ft/km.
¬TESZOR'15 85.53.11 Training as a driver of a private car is
added to the activities for which self-employed persons who opt for the
flat-rate taxation may apply the 80 % cost-sharing method.
Other new rules on income tax
¬ It will be possible for beneficiaries of the family allowance to
change their mid-year decision to claim the allowance in their tax return,
which, unlike other beneficiaries, was not previously possible under the
legislation.
¬ If an individual is a member of more than one voluntary mutual fund,
he or she may only indicate one fund in the statement of affiliation in the
income tax return. If this is not the case, the State Tax and Customs
Administration will automatically take the fund indicated in the previous
year's return into account for the allocation of the State aid.
¬ Income received in cash or in kind from the assets of the company
based on the asset distribution proposal to the former member during the
asset settlement procedure following the cancellation of the partnership
without legal successor shall be considered as other income.
¬ The use of factors of production belonging to the holding is
treated as income from the transfer of immovable or movable property.
Changes in social contribution tax and social security benefits
Employers who employ severely disabled workers, who do
not have a complex qualification for the existence of a disability and who are
not in receipt of benefits for disabled workers but of disability allowance
or personal allowance for the blind, may now also benefit from a partial
reduction.
In the case of the cathegory of „other income” from a paying
agent, the paying agent must assess, declare and pay the social contribution
tax on a monthly basis. If the assessment of the advance personal income tax is
not the responsibility of the paying agent, the individual is liable to pay the
social contribution tax.
To determine the tax credit for the vocational training contribution
for vocational training and dual training related to participation in
vocational education and training, the pro rata cost of the vocational
education and training per working day must be multiplied by the number of
working days in the reference month and the ratio of the vocational education
and training in relation to the total working day.
Guest workers employed under the
Act on the Employment of Guest Workers in Hungary are not considered to be
labour market entrants and therefore do not qualify for the labour market
entrants' allowance.
To simplify the administrative obligations of sole proprietors and
partnerships, social contribution tax is also to be paid for the whole
month, in line with the contribution rules, even in months in which the sole
proprietor does not suspend his activity for the whole month.
As of 1 July 2023, the provision of the emergency government decree that
the paying agent does not have to pay the simplified public payer's
contribution will become law. The amendment sets the basis for calculating
the pension benefit under the simplified employment scheme at a percentage of
the minimum wage applicable on the first day of the month, instead of the
previous fixed daily amount. 1.4% of the minimum wage applicable on the first
day of the month for seasonal agricultural and tourism work. For occasional
work and occasional work as a film extra, the calculation is based on 2.8% of
the minimum wage, rounded up to 100 HUF.
