Hungary: Personal income tax and social security changes 2013

The Hungarian government approved several tax law changes for the year 2013. Below we summarize a selection of personal income tax and social security changes.

Selected personal income tax changes.
Annual employment income of HUF 2,424,000 (approx. EUR 8,315) remains subject to 16% personal income tax and 18.5% employee social security contributions. In the case of annual income between HUF 2,424,000 and 7,942,000 (approx. EUR 8,315 to EUR 27,245) also16% personal income tax and 18.5% contributions apply. Thus the tax liability of this part of the income is reduced by approximately 4%, which gives a maximum additional net income of HUF 238,377 (approx. EUR 818) per year.

In the case of an annual income of over 7,942,000, 16% personal income tax instead of 20.32% and contributions at a rate of 18.5% instead of 8.5% are payable. Accordingly, the personal income tax and contribution liability on the income exceeding HUF 7,942,000 increase by 5.68%. The 27% tax base adjustment as part of the accumulated tax base was abolished as of 1 January 2013. Accordingly, the personal income tax rate on income involved in the consolidated tax base (e.g. employment income) will be a uniform 16%, even for annual incomes of over HUF 2,424,000.

Selected social security changes.
The employee pension contribution cap (HUF 7,942,200, i.e. approx. EUR 27,245 in 2012) was abolished as of 1 January 2013 and the 10% employee pension contribution is payable on the total income.

The scope of mandatory social security was changed and now applies, besides Hungarian nationals, also to foreign individuals working in Hungary.

Babett Korponai
bkorponai@deloittece.com

 

 

 

Barbara Krüglstein
bkrueglstein@deloitte.at

www.deloitte.at

 

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