Hungary - Tax Guide for Freelance Contractors
Welcome to our guide to Hungarian Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, Hungary.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in Hungary. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in Hungary.
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Hungarian Income Tax
Hungarian Social Security
Hungarian Visas and Work Permits
Umbrella and Contract Management Services in Hungary
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Tax residents in Hungary: are liable to pay Hungarian tax on their worldwide income,
Non tax residents in Hungary: are liable to pay tax on Hungarian-source income.
Individuals will be regarded as tax residents:
- if they are a Hungarian citizen,
- if they have a permanent home in Hungary,
- if their centre of vital interests is in Hungary,
- if their habitual abode is Hungary,
- if they spend more than 183 days in Hungary.
Married persons are taxed separately.
Taxable income includes:
- income from employment including salary, bonuses, reimbursement of costs and most insurance policy premiums paid by the employer for the employee’s benefit,
- receipt of securities,
- options and similar rights,
- benefits in kind - as of 2011 this term is replaced by two distinct categories “certain defined benefits” and “non-employment benefits.” In either case, the tax is payable by the provider of the benefits at a value of the market value less any amount paid by the recipient.
Certain deductions are permissible for 2012:
- family deduction of up to HUF 62'500 per child per month (under certain conditions)
Tax credit for 2012:
- 20% of the voluntary contributions paid to a mutual pension fund and/or % of the voluntary contributions paid to a mutual health or self-support insurance may reduce the tax liability (limited amount),
Income tax rates for 2012:
- 20.32% for aggregate taxable income,
- 16.00% flat rate for all other types of income.
A "super gross-up" regime applies, which means that the aggregate taxable income is increased by the social security contribution or health care charge payable by employers. Consequently, the actual tax charge passes from 16.00% to 20.32%. In 2012, the gross-up correction is only applied in respect of annual income in excess of HUF 2'424'000.
By the 20th of May of the following year.