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.
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