Personal income tax

Tax refund for parents with children

Individuals entitled to family allowance on any day in 2021 (even if they do not claim the family allowance) will receive a refund of their personal income tax for 2021 up to a maximum amount of HUF 809,000

• personal income tax on the consolidated tax base,
• from the personal income tax part of the simplified income tax contribution (PIT) of 15 percent, which is 9.5 percent of the PIT.
• 25% of the specific tax for small businesses (KIVA).

It is also possible to reallocate the family allowance.

Changes in minimum wage and employer contributions:

From next year, the limits for SZÉP Cards will revert to the statutory level. The annual recreational limit in the private sector will again be HUF 450,000 net per year.

The limits for each sub-account that qualify as other benefits:

a) the maximum amount of aid transferred to the accommodation sub-account is HUF 225 thousand per year,

b) aid paid into a catering sub-account up to HUF 150 000 per year,

c) the maximum amount of the subsidy transferred to the leisure sub-account is HUF 75 thousand per year.

The interoperability between sub-accounts will be extended until 30.09.2022, but the exemption from social contribution tax will no longer apply from next year!

The benefit is taxed according to the rules in force at the time of payment.

Evolution of public charges for other benefits.

Net benefit x (15% PIT + 13% SZOCHO)=28%

Evolution of public charges for certain defined benefits:

(Net amount of benefit x 1.18) x (15% PIT+13% SZOCHO)= 33.04%

 (Effective: 01 January 2022)

Home office allowance

Home office, which was previously regulated by a government decree in the context of the emergency situation, has been included in the Labour Code and the Social Security Act.

From next year, in the case of home office stipulated in the employment contract, an amount equal to 10% of the monthly minimum wage valid on the first day of the tax year (from 01.01.2022 HUF 20 000) may be deducted as expenses from the amount paid as compensation for home office without a certificate.

If the home office does not cover the whole month, the part of the monthly amount proportional to the days of home office is considered as reimbursement of expenses without justification.

(Effective: 01 January 2022)

Tax exemption for youth under 25 year 

The benefit can be claimed from 01.01.2022 as a reduction of the consolidated tax base until the individual reaches the age of 25.

Months in which the taxpayer has not yet reached the age of 25 may be taken into account as months of entitlement. The last month of entitlement is the month in which the young person reaches the age of 25.

The maximum amount of the benefit per month of entitlement is the average gross salary at the level of the national economy in July of the year preceding the year in question, which is 433 700.

(Effective: 01 January 2022)

Tax exemption for bicycles

Companies can offer their employees bicycles on more favourable terms next year. With a change to Annex 1 of the Income Tax Act, payers can provide tax-free use of bicycles powered by human power or assisted by an electric motor of up to 300 watts.

As a result of the amendment, employers can provide their employees with an e-bike that meets the conditions, without the bicycle becoming the property of the employee. It should be stressed that the payer can only provide the use of a bike tax-free.

Rules on cryptocurrency

From 2022 onwards, income from the sale of crypto assets will be considered as separate taxable income and will no longer be subject to social contribution tax.

Income from crypto-asset transactions must be assessed by the individual on a tax yearly basis, which can be done by completing a draft tax return or in a self-assessment. Under a transitional provision, individuals who have not assessed income in respect of a transfer or assignment of a cryptoasset before 2022 may assess income under the new rules and take it into account as transaction income for 2022.

(Effective: 1 January 2022)

Social contribution tax

The social contribution tax rate will be reduced from 15.5% to 13% from 1 January 2022.

Tax relief for training and dual education

This new tax relief is introduced in the social contribution tax as a result of the restructuring of the training contribution (szakképzési hozzájárulás). A taxpayer who concludes a employment contract or a student employment contract as an employer (even a KIVA taxpayer) will be able to benefit from the social contribution tax to claim the benefits previously available in respect of the gross liability for the training contribution.

(Effective: 1 January 2022)

Social security

Rates

There are no significant changes in contributions, which will be as follows in 2022:

• Social security contribution rate 18.5%
• Pension contribution rate 10%
• The monthly health service contribution will increase to HUF 8 400 from 1 January 2022 (daily amount HUF 280)

Rehabilitation contribution

The amount of the contribution is nine times the statutory minimum basic wage for full-time employees on the first day of the year in question, from 2022 HUF 1 800 000 per person per year

Simplified public contribution

The rate of EKHO to be paid will be reduced from 15.5% to 13%.

(Effective: 1 January 2022)

Small business tax (Kisvállalati adó – kiva)

The tax rate is reduced from 11% to 10%.

A KIVA taxpayer who is engaged in dual training can claim tax relief from the training contribution (szakképzési hozzájárulás), even though the KIVA replaces the training contribution. The KIVA payer must have a vocational training employment contract, a student employment contract or a cooperation agreement with a higher education institution. Under a transitional arrangement, for the tax year 2021, the vocational training contribution can still be claimed in the form of a tax refund.

(Effective: 1 January 2022)

Corporate income tax

Development tax allowance

From 2022, small businesses will be able to apply for development tax relief from a threshold of at least HUF 50 million, while medium-sized businesses will be able to apply for development tax relief from a threshold of at least HUF 100 million in present value. It will remain subject to notification.

(Effective: 1 January 2022)

Cost of bikes provided by the employer for use by employees

From next year, the costs incurred by the company for the purposes of the business activity are deemed to be costs incurred by the company for the purchase, transfer, use, maintenance and operation of a bicycle, by whatever means, provided to an individual or a member of its management, a personally contributing member of its management, an individual or a member of its management, a retired person in his/her own right who was previously employed, and close relatives of the aforementioned individuals, which is powered solely by human power or assisted by an electric motor of up to 300 W (e.g. service, hire).

Considering that the bike is used to satisfy the employee's private needs and is not related to the taxable supply of goods or services by the company providing it, the VAT passed on to the company on the purchase or rental of the bicycle cannot be deducted under the general deduction provision of the VAT Act.

(Effective: 1 January 2022)

Value added tax

eVAT scheme

Under the amendment, which was already announced in 2020, for the tax assessment period covering 1 July 2021, the tax authority would have prepared a draft return for businesses based on data received from invoice data services and online cash register data, which would have been made available to taxpayers from the 12th day of the month following the month concerned.

Due to the emergency, its introduction was first postponed until the tax assessment period including 1 October 2021, and then a government decree stated that the eVAT regulation would not enter into force during the emergency period. From 1 January 2022, the rules relating to the draft tax return to be prepared by the NAV, its adoption, amendment and supplementation will be completely repealed.

(Effective: 1 January 2022)

Rules on irrecoverable debt

From 1 January 2020, the amount of a supply of goods or services may be reduced, subject to certain conditions, if the taxable customer has not paid the consideration for the goods or services and the date of supply was after 31 December 2015.

The amendment, which will apply from June 2021, has further simplified the current complicated conditions for enforcing a bad debt. Thus, some of the negative conditions (e.g. insolvency proceedings, tax insolvency, lack of tax arrears) that the buyer had to fulfil at the time of the underlying transaction have been removed. This makes it easier to comply with the VAT refund conditions.

(Effective: 10 June 2021)

Exemption from the obligation to issue invoices

As of 1 July 2021, a receipt can be issued for any payment method, provided that the other conditions for issuing a receipt are met (the taxable person is not required to issue an invoice, the customer is not a taxable person, the value of the transaction does not exceed HUF 900,000). However, this does not apply to intra-Community transactions.

(Effective: 1 July 2021)

Changes to reverse charge

Originally, the application of the reverse charge mechanism would have been abolished on 30 June 2022 for cereal and steel products listed in Annexes 6/A and 6/B of the VAT Act and for tradable assets (carbon dioxide quotas) entitling to greenhouse gas emissions. Under the amended legislation, reverse charge will continue to apply in this area after 1 July 2022.

(Effective: 1 July 2022)

Local taxes

Due to the long lasting epidemic situation, the restrictings for local governments will remain in place for the 2022 fiscal year.

For the tax year ending in 2022, the rate of local tax (helyi iparűzési adó) and municipal tax (települési adó) may not be higher than the rate of the same local tax or municipal tax as established in the applicable municipal tax ordinance in force on 2 December 2020.

The local government must maintain the tax exemption or tax relief under its tax ordinance in force on 2 December 2020 for the tax year ending in 2022.

The local government is not entitled to introduce new tax for the year 2022.

Local business tax

An enterprise that qualifies as a micro, small and medium-sized enterprise on the basis of the published annual report for 2021, by

• total number of employees is less than 250 and
• has an annual net turnover or balance sheet total of HUF 4 billion or less,

(without applying the two-year rule, but taking into account partner and affiliated member data)

is entitled to a reduction in local business tax if the local business tax rate set by the municipal decree applicable for the tax year ending in 2021 is more than 1 per cent.

If the conditions set out above are still met in the tax year ending in 2022, the above rules will apply in the tax year ending in 2022.

The entrepreneur must pay 50 percent of the business tax advance tax to be declared in 2022 at the tax rate specified in the municipal decree if the taxpayer has already made a declaration to the tax authority in 2021, provided that the entrepreneur does not have a registered office or a permanent establishment that was established after the declaration.

Those who have not made the declaration in 2021 must declare to the local tax authority of the municipality where they have their seat or establishment by 25 February 2022 that

• was a micro, small or medium-sized enterprise in the tax year ending in 2021, or  
• is expected to qualify as a micro, small and medium-sized enterprise in 2022.

The tax reduction is a temporary aid for 2021. In 2022, this aid may be used as a de minimis or transitional aid, depending on the entrepreneur's choice and the nature of his activity.

Tax legislation

Special payment facilitation procedures

The payment relief procedures have been extended: applications can still be submitted until 30.06.2022.

The tax authority may, upon application by both legal entity and natural persons, grant a single deferral of payment of up to six months or a maximum of twelve months of instalments without surcharge for tax up to HUF 5 million registered with the tax authority, if the applicant proves or is likely to prove, at the same time as submitting the application, that the payment difficulty is due to the emergency situation.

The tax authority may, at the request of a taxpayer who is not a natural person, reduce the tax debt owed by him in respect of a taxable amount by a maximum of twenty per cent, but not exceeding HUF 5 million.

Such a reduction is possible if the payment of the tax would make the applicant's business activity impossible for reasons attributable to the emergency.

(Effective: 10.06.2021)