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Payroll-related changes in Hungary, 2021

Every year begins with routine checks and an overview of changes, and the area of payroll is no exception. In January 2021, Hungarian companies and employers need to be aware of changes in payroll-related regulations, including personal income tax, social contribution tax and sick pay.

Minimum wage and guaranteed wage minimum

From 1  February 2021, the minimum wage is HUF 167,400 gross and the guaranteed wage minimum is HUF 219,000 gross.  Read more about minimum wage and guaranteed wage minimum in Hungary.  

Social contribution tax

The rate of social contribution tax is 15.5 percent, and this is the contribution rate that has been in effect since 1 January 2021 as well. 

The rules effective as at 31  December 2019 still apply to those employed in the form of a student contract, i.e. the payer is subject to social contribution tax liability on the income paid.

Employers do not pay social contribution tax in the case of employees who are pensioners if such employees are old-age pensioners employed in the form of an employment relationship. Employees who are pensioners must pay a 15 percent tax advance on the gross wage paid to them. 

Personal income tax allowances

1. As of 1 January 2021, there has been no change in the gross amount of the family tax allowance that may be claimed per eligible dependant and per eligible month (depending on the number of dependants):

  • HUF 66,670 in the case of one dependant,
  • HUF 133,330 in the case of two dependants,
  • HUF 220,000 in the case of three or more dependants.

2. As of 1 January 2021, mothers raising four or more children may reduce their consolidated tax base, thereby achieving full tax exemption. Eligible persons include mothers raising four or more children (either by birth or adoption) who are eligible for family allowance with respect to their children raised, those who are no longer eligible for family allowance but used to be eligible for family allowance for more than 12 years, and those who are no longer eligible due to the death of a child, provided that, in either case, the number of eligible children based on the above is at least four. Tax exemption does not automatically apply to all payments received under various legal titles, such as property rental, dividends, income subject to the simplified contribution to public revenues (EKHO) or the fixed-rate tax of low tax-bracket enterprises (KATA),etc. Personal tax discounts (for people living with severe disabilities) must be taken into account as an item deductible from the tax base. This means that eligible individuals may reduce their consolidated tax base by an amount equalling one third of the minimum wage, rounded to HUF 100. Eligibility requirements are the same as before. As the minimum wage remained unchanged, the amount of the discount itself is the same as last year.

Any tax allowances that are not claimed during the year (family tax allowance, first marriage tax allowance, personal tax allowance or tax allowance for mothers raising four or more children) with respect to 2021 can be claimed by individuals in the spring of 2022 when filing their annual tax return. Employees are now able to complete the declarations through the Ügyfélkapu portal as well, and the declarations will be delivered to employers by NAV. If an employee submits a declaration on allowances both in writing and via Ügyfélkapu, then the written declaration is the one that must primarily be taken into account by the employer. 

The M30 income certificates for 2020 required for preparing personal income tax returns for 2020 must be provided to employees by 31 January 2021.

Payroll & social security consulting

Child benefits (childcare allowance and childcare benefit)

The amount of the childcare allowance remains unchanged at HUF 28,500 gross. The maximum amount of the childcare benefit is HUF 225,400 gross.

Health care contribution

As of 1 January 2021, the amount of health care contribution is HUF 8,000 per month (HUF 270 per day).

Fringe benefits

As for fringe benefits, the reduced tax rate for SZÉP Cards is still in effect. The reduced rate effective until 30 June 2021 is 15 percent. Starting from 1 July 2021, employers will have to pay the previously effective full amount of public dues.

The limits for benefits paid to SZÉP Cards which are subject to the reduced rate that is valid until 30 June 2021 will be as follows:

  • benefits of up to HUF 400,000 per year transferred to the accommodation service sub-account;
  • benefits of up to HUF 265,000 per year transferred to the catering service sub-account of the SZÉP Card;
  • benefits of up to HUF 135,000 per year transferred to the leisure service sub-account of the SZÉP Card;

It is important to note in connection with the SZÉP Card that, starting from 1 July 2021, benefits provided by other employers will once again have to be taken into account when determining annual limits.

Tax-exempt benefits 

Certain tax-exempt benefits are still available, but there are cases where tax-exempt payments can be made only up to a specific limit. 

These include tickets to cultural and sports events as these are exempted from tax up to the amount of the minimum wage (HUF 161,000).

In addition, exemption from tax also applies to day-nursery and kindergarten services.

Sick pay forms and hospital patient sheets

Starting from 2021, social security disbursement agencies will be subject to strict controls regarding sick pay forms and hospital patient sheets. Pursuant to the statutory requirements, the sick pay certificates received must be forwarded to the company that manages the accounts of the social security disbursement agency within 5 days where the sick pay must be accounted for and disbursed to the insured person within 8 days (provided that the claim can be judged on the basis of the available data at the time when the sick pay request is submitted). 

However, employer's certificates must be submitted even in cases where the entity is not a social security disbursement agency, i.e. the employer must register the receipt of the sick pay forms. 

The maximum daily amount of sick pay is HUF 10,733 gross (since this amount is pegged to the minimum wage, it remains unchanged for now).

Working while receiving disability and rehabilitation benefits

Effective 1 January 2021, the cap on earnings from work while receiving disability and rehabilitation benefits was abolished. Taxpayers no longer need to make sure that their earnings do not exceed one and a half times the minimum wage in three consecutive months.

Simplified employment

The maximum daily amount payable for simplified employment which does not give rise to additional tax liabilities is HUF 9,633 (for the minimum wage) and HUF 12,597 (for the guaranteed wage minimum).

Pursuant to the act on simplified employment, in the case of the simplified employment of extras working in film production in casual employment, public dues of HUF 4,000 per day will be payable as of 22 January 2021.

The thresholds for the simplified contribution to public revenues (EKHO) will remain unchanged in 2021.

Payroll & social security consulting

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