Social contribution tax provides central budget funding for certain social services serving the right to social security and physical and mental well-being and for the maintenance of the state pension system.
Social contribution tax is payable by:
- private entrepreneur unless he or she is a pensioner on own right or receives widow's pension and has reached the relevant age limit for old-age pension
- small-scale agricultural producer unless in the tax year preceding the tax year concerned it qualified as a small producer or had no contribution payment obligation
Base of social contribution tax
The base of the tax payable by the payer is:
- the income from non-independent activities and the part of income from independent activity taken into account for tax advance base calculation provided, paid to a natural person in a legal relationship generating tax payment obligation with a payer increased by the amount of interest body member ship fees subject to PIT,
- the fee actually paid under study contract,
- in the absence of benefits provided under the above points, the base wage defined in the employment contract or the remuneration defined in the contract.
The base of the tax payable by private entrepreneurs applying taxation based on their entrepreneurial income is the entrepreneurial withdrawal or, in the case of flat-rate taxation, the income specified for this purpose. The base of the monthly tax payable with regard to an economic association's or sole trader's legal relationship generating tax payment obligation with its member is at least 112.5 percent of the minimum wage. The base of the monthly tax payable by the private entrepreneur for himself is at least 112.5 percent of the minimum wage. The base of the monthly tax payable by the small-scale agricultural producer for himself is the minimum wage.
Rate of social contribution tax and tax allowances
Calculated tax: 17.5 percent of the tax base in 2019
Tax payable: the calculated tax reduced by the amount of social contribution tax allowances for which the person having social contribution tax payment obligation is eligible according to law.
The taxable person must assess tax monthly and declare and pay it to NAV (HU TA) until the 12th of the month following the month concerned.