separately taxed income

Separately taxed income

Separately taxed incomes are not included in the consolidated tax base and the tax base and the tax amount payable is to be determined separately for each item of separately taxed income. These incomes include, among others: 

• income of private entrepreneurs subject to personal income tax, 
• income from the sale of movable property, real estate or rights to assets and licenses, 
• interest income, 
• income from dividend, 
• income from exchange gain,
• income from permanent investments, furthermore
• certain specified benefits, 
• fringe benefits, 
• income from interest subsidy. 

In the case of certain specified benefits, fringe benefits and income from interest benefits, personal income tax is generally payable by the payer rather than by the individual.

Employee securities benefit program

An employee securities benefit program is related to separately taxed income, although the benefit granted under the program does not itself qualify as a fringe benefit or as a separate category of separately taxed income.

Under the program, an employer may grant eligible employees or executive officers securities, such as shares or quotas, or rights to acquire such securities.

If the statutory conditions are met, the value acquired under the program does not qualify as income at the time of acquisition, up to HUF 1 million per individual and tax year. The securities must be placed in individual custody and generally retained until the last day of the second calendar year following the year in which the retention period begins.

Separately taxed income may arise subsequently. Dividends paid on the securities are taxed as dividend income, while gains realised following the sale of the securities are generally taxed under the rules applicable to capital gains. Personal income tax and, where applicable, social contribution tax may be payable on such income.

The favourable tax treatment may be lost if the statutory conditions are not met or the securities are sold, transferred or removed from custody during the compulsory retention period.