Hungarian Income Tax

Individuals who have a permanent home or their centre of vital interests or their habitual abode in Hungary are considered to be tax resident and are taxed on their worldwide income. Non-residents are only taxable on Hungarian-source income. Income from employment or self-employment, capital, the receipt of securities, options and similar rights and benefits in kind are all taxable. Employment income includes salary, bonuses, reimbursement of costs and most insurance policy premiums paid by the employer for the employee’s benefit.

The main items exempt from tax on employment income are: reimbursements for training or education costs for the employer’s purposes; payments by the employer to a private pension fund as a supplement to the employee’s premium, to a voluntary mutual pension insurance fund or a voluntary mutual health or self-support insurance fund up to a ceiling of 50% of the minimum wage. Certain benefits in kind like meals (up to HUF 10’000 per month) and meal vouchers (up to HUF 5’000 per month), working clothes, childcare services, gifts (subject to ceilings) and relocation allowances are not taxable. The rates of income taxes for 2004 are 18% on up to HUF 1’700’000 and 36% on any excess. Employers have to withhold income tax on employment remuneration. Individuals have to file tax returns and married couples are taxed separately.