Changes in taxation in 2018

Taxation

Some remarkable but not so significant changes have taken effect as of 1 January 2018 in Hungarian taxation. Changes in taxation contains reduction in a number of tax rates, new law on taxation, and putting online invoicing alive is also expected in the middle of 2018.

 

Vat

There are some cuts in vat in 2018: tax of Internet became 5 percent, which. The discounted VAT rate reduced to 18% last year is reduced to 5% for catering and locally produced non-alcoholic beverages. Tax on fish will be 5 percent.

In addition to tax reductions the most important 2018 change is expected in VAT. This is connecting online invoicing software directly to NAV, resulting in immediate data delivery. The tax office will launch the new system on July 1, which is currently under testing. At the same time, the value of the domestic vat summary statement will decrease from HUF 1 million to HUF 100 thousand. Importantly in case of manual invoicing the companies need to delivered the data in 5 days via a web interface.

Reduction in social contribution tax and healthcare contribution

In the light of the 2016 increase in wages the government has decided to go for lowering social contribution tax. It will be not 20% in 2018 as planned originally, but

Along with the fall in the rate of social contribution tax, the 22 percent rate of healthcare contribution is also be reduced to 19.5 percent. Additionally the tax payable by the payer is reduced to 19.5%. As a result, the burden on certain cafeteria items has changed, with some benefits ranging from the previous 43.66% to 40.71%.19.5% only (2016: 27%; 2017: 22%). Nonetheless this will be most likely offset by the substantial increase in minimum wage and guaranteed wage minimum.

Increase in minimum wage

In 2018 the minimum wage is HUF 138,000 (2017 it was HUF 127,500), which is approx. €445.
Guaranteed wage minimum became HUF 180,500 (while it was HUF 161,000 in last year), which is approx. €580.

 

Personal tax allowances

Already before 2017 the government has accepted the increase in family tax credit. The tax benefit is raised to HUF 17,500 per child (compared to last year's HUF 15,000 per child) for families with two dependants. The benefit remains unchanged for families with 1 child or 3 or more children.

The employer’s tax free allowance for mobility has increased to 40 percent of the minimum wage for 24 months from the job start (in 2017 it was 25 percent). Additionally employer's may offer 20 percent allowance (instead of last year’s 15) for the next 24 months.

Apartment rentals

From the 2018 hostel operators may apply for flat rate tax up to 3 apartments compared to last year’s 1 apartment. The flat rate tax became HUF 38,400 per room per annum.

Another serious benefit is that long-term apartment lessors no longer have to pay 14 percent healthcare contribution. Consequently only 15 percent personal income tax will be payable regardless of the amount of income from rent.

Introducing tourism development contribution

As from 2018 the newly introduced tourism development contribution will payable by catering companies. This will be based on the value of services excluding VAT.

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