Important tax laws will change in the near future!
The number of amendments to the tax legislation has increased significantly in the recent period in Hungary. VGD Hungary constantly informs its customers about the most important changes with its newsletters. In addition to the tax law changes explained in our newsletters so far, further changes in tax legislation are expected. We will inform our clients upon announcement of these changes as well.
It is worth highlighting that, based on the decision of the Hungarian National Assembly, a social income tax will be reduced from 17.5 to 15.5 from 1 July. The decrease also affects the specified allowances and liabilities payable after the interest discount. From 1 July 2020, the value should be multiplied with 1.18 and for this should be counted 15% personal tax income and 15.5% social contribution tax. In parallel, 15.5 percent of EKHO (Simplified contribution to public revenues) will be paid from July 1 on the EKHO fund amount.
Please note that the 85% rule applicable to the determination of the consolidated tax base is also changing. In case, after the income included in the consolidated tax base, the individual is liable to pay social contribution tax (e.g.: other income received from abroad), unless it is eligible as an expense or reimbursed to the employee, 87 percent of the established income should be considered as income from 1 July 2020.
The small business tax rate will also change, however it will decrease only from 1 January of 2021, from the current 12 percent to 11 percent.
In addition, the changes related to the SZÉP Recreation Card is also considerable: in 2020, the amount with reduced taxation increased to HUF 800,000 in the private sector and to HUF 400,000 in the public sector, contributing to the revival of domestic tourism after the epidemic ended. The maximum amount that can be transferred to sub-accounts is as follows:
• SZÉP Accommodation maximum HUF 400 thousand per year (instead of HUF 225 thousand),
• SZÉP Catering maximum HUF 265 thousand per year (instead of HUF 150 thousand),
• SZÉP Leisure maximum HUF 135 thousand per year (instead of HUF 75 thousand),
taken together, not exceeding the annual maximum amount.
In addition, the payable social contribution tax on this fringe benefit was abolished until 31 December 2020, so the tax burden on the benefit given to the SZÉP Card was reduced to 15%, only the personal income tax has to be paid after the benefit, which is thus really favorable. So it might be worth considering even modifying the cafeteria rules.
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Should you have any questions regarding the contents of this newsletter or the underlying calculation required for use,
the tax specialists of VGD Hungary are at your disposal!
