What should you check in your PIT return?
The Hungarian tax authority compiles the draft personal income tax returns based on domestic employers’ and payers’ data reporting. For most individuals, the draft PIT return automatically becomes final on 20 May 2025, without any further review or modification.
However, many taxpayers need to supplement their tax return, particularly those with foreign-sourced income, rental income from real estate, independent business activities, profits or losses from controlled capital market transactions.
1. Income from abroad
Determining the tax liability of foreign-sourced income requires an examination of not only the Hungarian Personal Income Tax Act but also the laws of the other country and the international treaties between Hungary and the source country. For example, in case of Hungarian resident individuals, foreign-sourced interest and capital gains are typically taxable only in Hungary, whereas dividends are generally subject to taxation both abroad and in Hungary.
A common scenario in which PIT liability arises in Hungary for income from abroad includes cases where:
a) an individual works for a foreign employer while residing in Hungary, or
b) an individual holds a securities account at a foreign bank or investment service provider.
In these cases, the tax authority does not have prior information on the individual’s income when preparing the draft PIT return but may later obtain data automatically from abroad. For example, within the European Union, data can be received automatically under DAC 1; furthermore, information on foreign bank accounts may arrive from over 100 countries through automatic information exchange system.
As stated in the tax authority's 2025 audit plan, the tax authority will continue to initiate supporting procedures by individuals whose foreign accounts or income are reported through automatic data exchange. While these audits expectedly will initially focus on previous years, it is still advisable to correctly report such income in the 2024 tax return, as the tax authority has been paying increasing attention to verifying these earnings in recent years.
2. Income from rental property
If the property is rented to a company (which qualifies as a payer) that reports data to the tax authority, the tax authority's prepared tax return draft will include the rental income details, including the personal income tax advance deducted by the payer.
If the landlord initially declared the use of a 10% expense ratio but incurred significant costs in the meantime, it may be beneficial to opt for itemized expense accounting when determining the taxable amount by the preparation of the final tax return.
If the property is rented to a private individual, the landlord must report the rental income, expenses and the amount of tax advances paid quarterly in the PIT return. The draft tax return does not contain any data in connection with this income. If someone’s only source of income in 2024 was from such private rental activities, the tax authority will not prepare a tax return draft for them.
3. Income from the sale of property
If the individual sold a property at a lower price than the original purchase price or sold it more than five years after the purchase, no taxable income arises, and the revenue from the sale does not need to be reported in the PIT return. In other cases, the individual must assess the taxable income from the property sale and supplement the draft PIT return with these details. The electronic platform provides guidance for this process.
4. Income from the sale of movable property
No tax liability arises if the total income from selling movable property does not exceed HUF 200,000, provided it is not derived from business activities. If the income exceeds this threshold, personal income tax of 15% must be paid only on the portion exceeding HUF 200,000. In this case, the full income must be reported in the tax return, but the tax liability calculated at 15% can be reduced by HUF 30,000.
5. Controlled capital market transactions
Those who have profits or losses from controlled capital market transactions should not forget about tax equalization. You can save personal income tax with it.
If an individual earns income from controlled capital market transactions (e.g., stock sales) through a domestic bank or investment service provider, the tax authority will include this income in the draft PIT return. However, the tax equalization section must still be completed manually, as the tax authority does not prepare this part.
The importance of this lies in the fact that for the tax year and the following two years, taxable gains from controlled capital market transactions can be offset against losses from such transactions. This is known as tax equalization.
Income from controlled capital market transactions may also arise from accounts held with foreign banks or investment service providers. However, the draft tax return prepared by tax authority does not include any data on such income. Tax equalization can also be applied to these earnings, provided they are correctly reported in the tax return.
If someone realised loss on controlled capital market transactions, it is also advisable to include it in the tax return. For example, if an individual had a HUF 5 million loss in 2024, the corresponding PIT would be HUF 750,000. If this person realises at least HUF 5 million profit from controlled capital market transactions in the next two years, the tax liability can be reduced by the full HUF 750,000, provided the tax equalization section was correctly completed in the relevant PIT returns.
6. Cryptocurrency transactions and PIT
Data on cryptocurrency transactions do not appear in the draft tax return prepared by the tax authority unless the income was received from a payer who reported it to the tax authority. For cryptocurrency assets, a taxable event occurs when the asset exits the crypto system, such as when it is exchanged for fiat currency or used to purchase goods or services.
If the revenue realized in 2024 exceeds the verified expenses incurred for acquiring cryptocurrency assets and related transaction fees, a transaction gain must be reported, which is subject to a 15% PIT liability.
The two-year tax equalization rules also apply to cryptocurrency transactions. Therefore, it is advisable to supplement the draft tax return even if an individual realised losses from cryptocurrency transactions in 2024.
According to the tax authority's 2025 audit plan, individuals earning income from cryptocurrency transactions can expect the tax authority to conduct supporting procedures to verify compliance with tax reporting and payment obligations as required by law.
What tax benefits should be considered in the personal income tax return?
Claiming family tax allowance in the PIT return
Parents eligible for the family tax allowance can claim it in their tax return even if it differs from the tax advance declaration made during the year. This means that if only one parent claimed the allowance throughout the year but the other parent is also eligible, they can split the benefit in the tax return. This can be particularly advantageous if one parent could not fully utilize the allowance due to lower income.
If a taxpayer did not claim the allowance during the year (e.g., did not declare it to their employer),they can still do so retroactively in their tax return. To claim the benefit, proof of entitlement to family allowance is required.
What other tax benefits should be considered in the PIT return?
Several tax benefits can be claimed in the tax return, some of which may not be included in the draft prepared by the tax authority. These include:
- Tax benefit for individuals under 25 – Personal income tax exemption applies automatically to wages for those under 25, but if it was not applied during the year, it can still be claimed in the tax return.
- Tax benefit for mothers under 30 – Mothers under 30 who are raising at least one child are eligible for an income tax exemption on certain types of earnings.
- Tax benefit for mothers with four or more children – Mothers who have been raising at least four children are exempt from paying personal income tax on their wages and some other types of income.
- Personal tax allowance – Individuals with certain medical conditions are entitled to an annual tax benefit worth tens of thousands of forints.
- First marriage allowance – Couples who married within the last two years can claim a tax relief of HUF 5,000 per month (for up to 24 months).
If a taxpayer did not declare their eligibility during the year but qualifies for any of these benefits, they can still claim them in their tax return.
What actions are required for the PIT return?
If the taxpayer agrees with the draft tax return prepared by the tax authority and no modifications are needed, the draft return will automatically become final on 20 May 2025.
Exceptions:
Small-scale producers, private entrepreneurs, and individuals with a tax number – They must always supplement and submit their tax return, as the tax authority’s draft does not include all relevant data.
If income was earned abroad – the tax authority’s draft return does not include income from abroad (e.g., foreign wages, dividends, capital gains),so the taxpayer must report these separately.
If rental income was received – Especially if the tenant was an individual, as the tax authority’s draft does not include this income.
If there were gains or losses from controlled capital market transactions – To ensure tax equalization, these transactions must be accurately reported in the return.
How can the PIT draft return be modified?
Taxpayers have until 20 May 2025, to modify their draft tax return:
• Electronically:
By logging into the tax authority’s eSZJA system, where the draft can be edited and submitted.
• On paper:
The taxpayer can manually fill out the 24SZJA form and send it to the tax authority by post.
If uncertain about their tax return, individuals should consider consulting a tax advisor to minimize tax risks and maximize available benefits.
