Tax In Hungary

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in Hungary is complying with the country’s tax system. As well as paying tax in Hungary, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income: 

If you’re working in Hungary under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Hungary for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Hungary, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Hungary through PAYE is left with the prospect doing everything themselves.

Do you know much about Hungarian Tax Law? Does Hungary have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Hungary can range from 0 to 15 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in Hungary, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax : 

Contractors in Hungary are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Hungarian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Hungarian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Hungarian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in Hungary, many of whom are experts in tax and immigration laws. If you have any questions about tax in Hungary, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Hungarian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Hungary but without the overhead of directly dealing with the Hungarian tax authorities. Get in touch with us today for some reliable advice on tax in Hungary!

When Do You Need to Lodge Your Tax Return?: 
20 May (with an extension to 20 November in some cases)
Tax Filing Deadline : 
20 May (with an extension to 20 November in some cases)
Can you file it online? : 
Yes, http://en.nav.gov.hu/
Currency: 
Hungarian Forint (HUF)
Tax-free Threshold in: 
None
Grossed Income: 
Flat Rate
Tax Rate: 
15%
How long does it take to set up: 
7 days
How much does it cost: 
HUF100,000-260,000 (depending on complexity of legal services) + HUF5,000 annual fee
Is it easy? : 
Starting a Business Rank: 79/190 (Source: World Bank)
How to File Taxes in: 

Step 1: Register for a Tax Identification Number (TIN)

Register for a TIN by completing form ‘T34’ which can be accessed here. Submit the completed form to the nearest tax office if you are a resident, and the Large Taxpayers Directorate if you are a non-resident. Detailed instructions on filling the the form can also be found here on the bottom of the webpage.

Upon successful registration, the National Tax and Customs Administration will issue you a tax card.

Step 2: Obtain a Draft Personal Income Tax Return

The draft personal income tax return is a statement on the income you have acquired during the income tax year, compiled on the basis of data provided by your employer. The Hungarian tax authority calculates your income tax on your behalf, taking into account advance tax payments and any tax benefits. The draft tax return indicates taxes still payable by you, or amounts to be returned to you.

From 15 March onwards, you can obtain a draft tax return on the NTCA website here. Alternatively, you can SMS 06 70/717-7878 the following:

SZJA [space] TIN [space] date of birth

Step 3: Verify Your Draft Income Tax Return

If you agree with the draft prepared for you by the NTCA, you do not need to do anything. This will be your official tax return.

If you do not agree with the draft, you can modify it online on WebNYK, or by completing and mailing form ‘SZJA’ to:

1410 Budapest

Post Office Box 137

Paper forms can be accessed here. You may also submit your forms in person to the nearest tax office, the addresses of which can be found here on the bottom of the webpage.

WebNYK is an tax-filing software which can be downloaded from the NTCA website here. The program will assist you in filling out your tax return. 

Notes: 

Employment income is taxed at a flat rate of 15%.

Does the 183 day rule apply in: 

Yes

When do you become a tax resident in: 

You become a tax resident in Hungary when:

  • You are a Hungarian citizen;
  • You have dual citizenship in Hungary and another country, and you are domiciled or usually reside in Hungary in the calendar year;
  • You are a EEA Member State citizen and you exercise your right to free movement for at least 183 days in Hungary in the calendar year;
  • You are a third country national permanently settled in Hungary or a stateless person;
  • You have a permanent home solely in Hungary;
  • Your centre of vital interests is in Hungary; or

You spend at least 183 days in Hungary in a calendar year i.e. you have a habitual abode there.

Am I taxed on my global income in: 

Residents are taxed on their worldwide income in Hungary. Non-residents are taxed on their Hungary-sourced income only.

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