The basics of income tax for expats in Hungary
Businesses, Hungarian nationals, and even foreign nationals are obliged to pay income tax if they receive income within Hungary. Every individual’s income is taxable in Hungary. Like elsewhere in the world, Hungarian tax laws also have tax exemptions and tax relief programs, but they are legislated by special rules.
Income tax for expats in Hungary is calculated per calendar year, which is why most locals and businesses prepare their tax returns at the end of each year. Keep in mind that there are certain tax advances that also have to be paid during the year as well.
What income is taxed in Hungary?
If you live in Hungary on a permanent basis, you are obligated to pay your worldwide income there. If you live in Hungary for less than 183 days of the tax year, you are not considered a tax resident and will only have to pay tax on the income you earned in Hungary.
Taxable income includes, but is not limited to:
- Salaries
- Bonuses
- Cost-of-living allowances
- Housing allowances or the value of accommodation provided
- Home leave
- Pension or life insurance contributions
- Provision of a company car
- Stock options
How much is the income tax rate?
Individuals pay a flat rate of 15% if they earn an income while living and working in Hungary.
Are there any deductible expenses for income tax?
Although these might vary, Hungarian income tax deductible expenses include:
- Some forms of state support for raising minors
- Scholarships paid bu non-residents to students studying n a foreign educational institution or researchers working abroad
- Some forms of support related to the purchase of real estate
- Services provided by insurance companies
When and how is income tax for expats in Hungary payable?
If you are employed by a Hungarian company, your employer deducts income tax and social contributions from your wages, daily allowances, or other remuneration. You only need to complete a tax return if you earn income from sources other than your employer or if you are employed by two or more employers simultaneously. All tax returns are due by the 20th of May of the following year.
Are there any tax-free incomes in Hungary?
Certain incomes in Hungary are considered tax free. These include, but are not limited to:
- Employer-provided housing for assignments
- Mobility costs for assignments
- Culture vouchers
- Certain life insurances
Need more help?
Our team of immigration lawyers are ready to assist you with all your legal matters while living in Hungary. If you need more information on Hungarian tax laws or need help with your legal documents, be sure to get in touch with us today!