Hungarian citizens living in the United States or American citizens living in Hungary may now be faced with the first time having to file a personal income tax return in Hungary for their income earned in 2024.
Tax residence
The first thing is to determine whether the individual has Hungarian tax residence or not. This issue is regulated in the Section 3(2) of the Act CXVII of 1995 on Personal Income Tax.
(If there is no agreement between the two countries the individual’s residence – from the point of view of Hungarian tax liability – must be determined according to Hungarian rules. For this reason, a Hungarian citizen is only considered a foreigner if he/she is also a dual citizen and does not have a registered permanent residence in Hungary.)
According to this a private individual has Hungarian residence if:
• a Hungarian citizen (except for a dual citizen who does not have a registered permanent residence in Hungary),
• Send in Hungary at least 183 days in a calendar year;
In addition to the above a private individual has Hungarian residence if:
• he has a permanent residence in Hungary,
• the centre of his/her vital interests (lifestyle) is in Hungary, i.e. the closest personal, family and economic relations connects him/her here (regardless of which state he/she has permanent residence),
• his/her habitual residence is in Mo.
A person who is subject to the scope of Act XC of 2023 on the general rules for the entry and residence of third-country nationals who has a permanent residence permit is also considered to have Hungarian residence.
An employee posted to Hungary from United States is a Hungarian resident if he/she is
• a Hungarian citizen,
• a Hungarian-American citizen and has a registered Hungarian address or does not have a Hungarian address but stays in Hungary for more than 183 days in a calendar yaer,
• a US citizen and has a permanent residence permit, or
• a US citizen whose centre of vital interests is in Hungary, if he/she does not have a permanent residence at all or not only in Hungary,
• a US citizen whose usual place of residence is in Hungary, if he has no permanent residence at all or only in Hungary, and his center of vital interests cannot be determined.
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