Tax package 2019 - cutting on fringe benefits

The Hungarian Government presented its new tax package and a draft law on the social contribution tax on 19 June 2018.

Personal income tax

SZÉP card remains the only fringe benefit. From 1 January 2019, the three sub-accounts of the SZÉP cards would remain the only way to provide fringe benefits at a reduced tax rate.

According to the above the 100 thousand HUF cash benefit introduced last year will also be canceled. Benefits for giving tickets to sport and cultural events, mobility purpose housing contribution, benefit regarding risk insurance fees and student loan repayment will be also canceled.

Corporate tax

It is to raise the maximum amount of the development reserve from HUF 500 million to HUF 10 billion (roughly from EUR 1.5 million to EUR 30 million) from 1 January 2019. (WTS)

Social contribution tax

Social and health-care contribution taxes will remain 19.5%. Social and health-care contribution taxes will be aggregated from 1 January 2019, therefore the incomes currently taxed with 14 % tax rate will be taxed with 19.5 %. Currently, regarding these incomes such as dividend income, health-care contribution to be paid is capped at 450 000 HUF per year. According to the act the cap will be amended so that social contribution tax shall be paid to the extent the total amount of incomes subject to social contribution tax reaches twenty-four times the minimal wage. Amendments regarding social contribution tax state that benefit for the employment of employees under 25 or over 55 years will be canceled.

Value added tax

The VAT Act is amended with rules on the transfer of vouchers, which primarily differentiates between single-purpose and multi-purpose vouchers regarding tax payment liability. The aim is to levy the tax upon the issuance of the voucher.

If a taxpayer is only settled in one country within the EU, then below the defined threshold tax must be paid on remote services in the country where the taxpayer is settled, according to the local regulations. This simplification refers to remotely provided services provided to non-taxpayers settled in a different Member State from that of the taxpayer, if the aggregate amount of the consideration for the services without taxes does not exceed EUR 10,000 or a corresponding amount in the national currency, either in the reporting year or in the previous year.

Standard 5% tax rate for milk types. UHT milks would be included under the scope of the reduced 5% VAT rate.