Taxation in Hungary
Hungary Tax 2013
Hungary Individual Income Tax
An individual pays tax on his income as a wage-earner or as a self-employed person. Tax for an individual who meets the criteria of a "permanent resident" in Hungary will be calculated on his income in Hungary and abroad. A foreign resident who is employed in Hungary pays tax only on his income earned in Hungary.
To be considered a Hungarian resident, there are a number of criteria to be met, such as ownership of an apartment, the permanent place of residence of the family and the criterion of spending more than 183 days a year in Hungary.
An employer is obligated to deduct, immediately on a monthly basis, the tax payable on an employee's salary. A self-employed person must prepay income tax that will be offset on filing an annual return. The advance payment is determined on the basis of the return made for the previous year. In the event of a new business, the advance will be calculated on the basis of estimates made by the owner of the business.
Certain payments are deductible from taxable income as detailed below.
Capital gains in Hungarian companies are added to regular income. There is a participation exemption under certain terms. Dividend received by a Hungarian company is generally tax exempt.
Individuals pay 16% for capital gains and other investment income.
Dividend income is taxed at 16%.
Interest income is taxed at 16% too.
The tax year in Hungary is the calendar year ending on December 31st.
If your income is only from a salary, you are not obliged to file an annual return.
An employer is obliged to deduct tax monthly at source from the wage of a hired worker. The tax deducted will be transferred by the employer to the Tax Authorities by the 12th of each month for the previous month.
An individual who is obliged to make an advance payment of income tax, will do so each month or each quarter, depending on the scope of his business.
The advance payment here too will be paid by the 12th of the following month.
The annual return for an individual including a supplement for any debt for tax arrears should be filed by March 20th of the year after the tax year.
A company is bound to prepay tax during the year. The advance payments are determined on the basis of the figures for the previous year. In the event of a new company, the advance payment will be calculated according to the assessment of the profits forecast for the first year. A report on advance payments is filed once a month, if the tax forecast is in excess of HUF 3 million. If the tax forecast is less than this, the report is filed once every three months.
The date for payment is the 20th day after the period of the report (whether monthly or quarterly as stated). The company will pay the difference between the tax it forecast and the tax due for the current year by December 20th.
The date for filing an annual return is May 31st in the year following the year reported.
The employer is obligated to deduct tax at source from a salaried worker and to allocate an additional sum for social insurance including pension, healthcare and unemployment.
The rates of tax are as follows:
| % | |
| Employer | 28.5 |
| Employee | Hungary Dividend, Royalties and Interest
|
| % | |
| Dividend | 0 |
| Royalties | 0 |
| Interest | 0 |
Hungary VAT
In most cases standard Value Added Tax in 2013 is payable at a rate of 27%.
There are reduced rates of 18%, relating to hotels and basic food, and 5% rate that relates mainly to products and services such as books and medicines.
Hungary Dates for Filing Reports
Reports must be filed monthly or quarterly with the VAT Authorities, with the report and payment being made by the 20th day of the month following the period relevant to the report.
A monthly return must be made by the owner of a business for which the VAT payable in the previous year was in excess of HUF 1 million.
INFORMATION TAKEN DIRECTLY FROM WORLDWIDE-TAX.COM
DISCLAIMER: The above information is an approximate guide to the the taxation in Hungary. The information may be subject to change.