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Hungary reduces social tax cost

On 12 June 2019, the Hungarian Parliament approved a bill that will see the social contribution tax and the simplified contribution to public revenues decrease from 19.5% to 17.5% from 1 July 2019. For companies with internationally mobile employees, the reduction in social tax cost is a welcome move that reduces overall assignment cost to the business and further limits tax cost for employees.

In connection with the rate decrease for social contribution tax, the Personal Income Tax Act has also been amended. If a private individual is required to pay social contribution tax after their income, then 85% of the income will be considered as the tax base (instead of the current 84%).

As a result of the social contribution tax changes, the basis of the benefits for small taxpayers has also been changed. With a view that, within the itemised tax payment obligation, the share of the social contribution tax will decrease and tax corresponding to individual contributions will increase.

As part of the summer tax package, in addition to the above, two other bills will are on the agenda for Parliamentary for debate and voting. The amendments proposed typically contain changes in the tax regime applicable from 2020. We will share the most important elements of these amendments after their parliamentary approval.

If you have any questions with regards to these changes please contact our GMS expert Christoph Schmidl