Taxation in another Member State

This part provides information on the basic rules on personal income tax in Hungary.

Kulcsszavak: personal income tax tax on wages pension border worker tax return draft tax return tax residency

  1. PERSONAL INCOME TAX

All revenue received by private persons is taxable in Hungary, with the exception of revenue specified as tax-exempt by law.

Domestic (Hungarian) tax residence:

According to Hungarian law, the following private persons qualify as resident in Hungary for tax purposes:

 

A private person not subject to the above qualifies as resident in Hungary if

 

 

If both Hungary and the foreign state consider the private person to be a tax resident of their given countries under their respective domestic laws, the provisions of the applicable double taxation convention shall be applied in order to determine tax residency as at the receiving of income and the country in which the income is taxable.

There are no special rules in Hungary for the residency of border workers and persons who receive pensions from other Member States.

 

Taxable income

Taxable income falls into two main groups:

  1. income subject to consolidation
  2. income taxed separately.

Consolidated income includes

  1. income derived from non-independent activities,
  2. income derived from independent activities (such as leasing immovable property and income from the activities of traditional small farmers), and
  3. income taxable under other titles.

Income taxed separately includes capital gains and income from the sale of chattels and immovable property.

Tax-exempt income

Law provides an itemised list of tax-exempt income.

Tax rules for income derived from non-independent activities

These forms of income include the wages, bonuses, and income paid for personal collaboration or for managerial positions and the positions of elected officers, paid to the private person in connection with his/her activity. Costs may not be deducted from the income.

The private person shall pay 15 % income tax for such income.

The employer or paying agent deducts the income tax from the income and pays it to the tax authority.

Taxes on pension

Pensions paid under the Hungarian pension system and income determined as a pension under a double taxation convention qualifies as tax-exempt income in Hungary.

Tax return

The personal income tax return is based on self-declaration. In the case of income provided by a paying agent, the tax authority prepares a draft tax return for the private person, which can be used for preparing the tax return.

The private person can also prepare the tax return independently using the ’SZJA form.

A penalty of no more than HUF 200 000 may be imposed on a private person who defaults on the submission of the tax return.

A late penalty shall be payable for the late payment of the tax.

The calculator on the NTCA website can be used to calculate the penalty:

https://www.nav.gov.hu/nav/szolgaltatasok/kalkulatorok

The deadline for submitting the personal income tax return is 20 May of the year following the tax year.

In their annual personal tax returns, private persons have to report their taxable income, thus also including the income derived from employment. The private person may also fulfil the reporting obligation by accepting the draft tax return compiled by the tax authority based on the data reported by the paying agent, or by submitting an ’SZJA return prepared by the private person.

The 15 % personal income tax shall be payable at the same time a submitting the personal income tax return.

National Tax and Customs Administration

Information on the personal income tax return:

https://www.nav.gov.hu/nav/szja/szja

https://en.nav.gov.hu/taxation/eSZJA

 

 

Did you find the information useful? Please tell us here!

NAV