Tax changes 2022 in Hungary

Dear Clients! Dear Readers!

On December 14, 2021, the Parliament has accepted the tax changes for next year. Some of the changes for 2022 have already been announced during summer, which were already detailed in our previous newsletter. We summarize the key points of the June and December tax packages in the below newsletter.

Given that the government has extended the pandemic emergency until June 1, 2022, new government decrees may introduce special rules in the field of taxation in the next six months.

1.   Personal income tax

Discounts for youths under 25

In 2022, young people under the age of 25 will not pay personal income tax up to the average salary (July 2021: HUF 433,700).

Reimbursement of remote working expenses

Reimbursement of expenses can be accounted without any document in connection with remote-working until the duration of the emergency, which is tax-free up to an amount of up to 10% of the minimum monthly wage, in proportion to the number of days worked in remote-working, are introduced into law.

New rules for revenues from cryptocurrency transaction

The favorable tax rules can be applied as early as 2021. Only 15% personal income tax will be paid on the profit of the tax year from the trade and mining of crypto assets. The most important information about the assessment of the tax has been summarized in our previous newsletter.

2.   Vocational training contribution, social contribution tax

As of 1 January 2022, the 1.5% vocational training contribution is erased.

As of 1 January 2022, the rate of social contribution tax will be reduced to 13% from the current 15.5%

As of June 10, 2021, the earning activity of students and retirees will be exempt from social contribution tax.

3.   Fringe benefits

In our newsletter on cafeteria we have already given you an overview of the current fringe benefit (“cafeteria”) rules including different tax rates applicable from 2022.

In 2022, up to HUF 450 thousand is taxable as a fringe benefit: 15% PIT + 13% social contribution = 28%.

The amount above the limit of HUF 450 thousand is taxable as certain specific benefits, the payer's tax burden in 2022 is 1.18x (15% PIT + 13% social contribution) = 33.04%. Certain specific benefits (including business gifts and cost of entertainment) are expected to be taxed in the same manner in 2022.

SZÉP card sub-accounts are interoperable until 31.12.2022 according to a recently announced amendment to the law.

4.   Corporate tax

From 2022, it is possible to reduce the tax base by the 20% of the book value of the assets and benefits given to the public interest trust foundation performing the public function, which is 40% in the case of a founder's or affiliate's asset order. If the benefit is provided to a public-interest trust or a university-based university or its maintainer under a higher education grant agreement, the pre-tax profit is reduced by 300% of the benefit (50% for other higher education institutions).

5.   Small enterprise tax KIVA

As of 1 January, the rate of the small enterprise tax KIVA is reduced to 10%.

6.   Value added tax

Even after the expiration of the tax, within 1 year after the occurrence of the cause, the taxpayer will be able to apply to the tax authority for a refund of the VAT wrongly paid to the seller. (Until now, it was only possible to apply within the 6 months prior to the statute of limitations.)

VAT on bad debts can be claimed within one year of the occurrence of the cause. A further simplification provision is that a number of previous conditions for recovering VAT on bad debts no longer need to be examined.

7.   Local taxes, rules of taxation

The Parliament extended the maximum rate of 1% for the local business tax of SMEs also for 2022, provided that their turnover or balance sheet total does not exceed HUF 4 billion and that this does not conflict with EU state aid rules.

From 2022, the special tax obligation of venture capital fund managers, the stock exchange and commodity exchange service providers financial institutions will be abolished

Registered head office service providers can now operate under stricter rules. If the designated service provider is not on the register of the office service providers, the tax authority will set a deadline of 15 days for the taxpayer to declare a suitable registered office, otherwise the tax number will be deleted.

We hope that our newsletter will help you interpret and apply the new tax rules. f you have any questions, we are happy to help.

Kind regards,

ABT Treuhand Group