TAX LAW CHANGES 2022

Personal income tax, social contribution tax, vocational training contribution,
certain specific benefits, family support

Social contribution tax, vocational training contribution

The amendment that has raised the biggest public interest related to the 2022 tax changes is the reduction in social contribution tax (“Szocho”) and the abolition of the obligation to pay vocational training contributions - both originally expected to come into force as of 1 July 2022 - which were brought forward to 1 January 2022.

Pursuant to the law amandment, the social contribution tax will be reduced more than expected (instead of the 15.5% Szocho payment originally planned for July 2022, the Szocho payment will be "only" 13% from January), so employers' tax obligations will be reduced from 17% to 13% for wages in January 2022, including the abolition of the vocational training contribution, too.

A further change is that, as a result of the abolition of the vocational training contribution, the provisions on the tax relief for supporting vocational education and training and dual training, which was previously available from the amount of vocational training contribution tax, will be incorporated into the Szocho Act.

In connection with the abolition of the vocational training contribution in 2022, the amendment also stipulates that no advance payment is required for the month of December 2021 and that the difference between the advance payment and the net obligation paid in 2021 must be paid or can be claimed back by 12 January 2022.

Effect of decrease in social contribution tax to other tax kinds

In view of the 2.5 percentage point reduction in the social contribution tax, the multiplier for determining the tax base for personal income tax and personal income tax advances is changed from 87% to 89% for individuals who are liable to pay social contribution tax in the absence of a payer (e.g. in the case of share-based payments received from a foreign parent company).

The reduction in the social contribution tax also implies positive changes in several other taxes from 2022. Accordingly, for example, the amount of the simplified tax contribution (“Ekho”) will be reduced by 2.5 percentage points from 15.5% to 13% (similarly to the Szocho).

Personal income tax (Tax law changes adopted in summer 2021)

The following changes, which will come into force from 1 January 2022, have already been adopted in the summer tax package:

• From 1 January 2022, the income earned on transactions carried out by a cryptocurrency (e.g. Bitcoin, Ethereum, etc.) is no longer part of the consolidated tax base, but qualifies as a separately taxable income, meaning that no social contribution tax is payable thereafter. The transaction performed becomes taxable only when the cryptocurrency leaves the “cryptoworld”: the conversion of a cryptocurrency to another cryptocurrency is tax-exempt. Provided that certain conditions are met, transaction income that does not exceed 10 percent of the minimum wage is non-taxable.
• It will not be necessary to file a yearly “tax statement” to qualify for the benefit for mothers raising four or more children.
• The private use of a bicycle provided by employer to a private individual, including motorised bicycles with power of up to 300 W, becomes tax exempt.

Cafeteria, entertainment expenses („reprezentáció”), business gifts

Pursuant to the current provisions, no social contribution tax should be payable on SZÉP Card benefits, entertainment expenses and business gifts until 31 December 2021. It should be noted that no provision has been made in the passed law amendments to further extend the end of this exemption period (i.e. 31 December 2021).

Therefore, companies will again have to pay social contribution tax in addition to personal income tax on the above benefits after 31 December 2021, which is worth bearing in mind when preparing the 2022 Cafeteria Policy.

In connection with the above, it is important to emphasise that companies should ensure that the full amount of the SZÉP Card benefit for 2021 is paid by 31 December 2021, as if a SZÉP Card benefit for 2021 is paid in January 2022, it will be subject to social contribution tax.

Amendments affecting family support

The provisions on family support will be further extended from 2022 by increasing the maximum amount of state support for children with a Start account (“baby voucher”) from HUF 6,000 to HUF 12,000.

We would also like to draw your attention to the personal income tax reimbursement affecting the majority of families with children, which will be paid in 2022. The details of the reimbursement have been summarised in our previous newsletters.

Updated: 10 December, 2021

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Should you have any questions regarding the latest tax law changes, the tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute tax advice