Published: May 04 2023
If you're an expat living, working or doing business in Hungary, it's essential to keep up with changes to regulations that may affect you. This article will provide a brief overview of the tax changes coming into effect in 2023.
15% Global Minimum Tax in the EU
Starting from 2024, the EU is introducing a 15% global minimum tax for corporations with a yearly revenue above €750 million. Hungary has already agreed to this tax, which will not impact small- and medium-sized businesses; their corporate tax rate remains at 9%.
Minimum Wage Increase
In Hungary, the minimum wage is adjusted each year for inflation. As of 1 January 2023, the minimum wage for positions that require no secondary education rose by approximately 15% to HUF 232,000. The guaranteed minimum salary for positions requiring at least a high school diploma is now HUF 296,400.
Changes to the SZÉP Card System
The SZÉP Card is a popular fringe benefit in Hungary that enables employers to give "non-salary compensation" to employees at a favorable tax rate while supporting domestic tourism. As of 9 January 2023, there will be only one unified account on each SZÉP Card, and the sub-accounts or "pockets" for accommodation, hot meals, and leisure activities will no longer exist.
Currently, freelancers in Hungary can opt for flat-rate taxation, allowing them to declare a specific percentage of their income as expenses. Starting in 2023, increases to the minimum wage will impact the scheme's monthly minimum contributions and tax-exempt income threshold. Newly introduced quarterly reporting aims to even out taxes for freelancers whose income is irregular.
Revenue-Based Tiers for Local Business Tax
The amount of local business tax paid to municipalities in Hungary is defined based on the location where a business is registered, and it can range from 0-2% of the business's revenue. Instead of exact calculations, beginning in 2023, businesses may opt to pay the tax based on a revenue-based tier system.
Electronic Billing and Invoicing
The latest tax legislation in Hungary permits invoices to be issued on paper or electronically, and it also opens up the opportunity for bills to be issued electronically in the future. We'll be watching for further updates on future legislation.
Changes to Real Estate VAT and CSOK
Newly built residential properties in Hungary incur a VAT rate of 5%. This rate will remain in effect for two more years. Additionally, the state's home purchase subsidy for families, CSOK, will now extend to building extensions to existing homes, and relevant tax exemptions will be available.
Hungary's 2023 tax changes will affect numerous areas, including corporate taxation, minimum wages, fringe benefits, quarterly reporting, and real estate. Freelancers can continue to take advantage of flat-rate taxation, and businesses have the option to pay local business tax based on revenue-based tiers instead of precise calculations. While there is still much to be determined regarding electronic billing and invoicing, continued updates are expected.
Questions & Answers
What is the global minimum tax in Hungary? Hungary agreed to the introduction of the 15% global minimum tax in the EU, which is supposed to come into force starting from 2024 and will affect only corporations with a yearly revenue above EUR 750 million.
What is the new minimum wage in Hungary? As of 1 January 2023, minimum wage for positions that require no secondary education is currently HUF 232,000, while the guaranteed minimum salary for positions that require at least a high school diploma is HUF 296,400, which has been increased by approximately 15%.
What is the SZÉP Card in Hungary? The SZÉP Card is one of the most popular fringe benefits in Hungary, which lets employers provide "non-salary compensation" to employees at a favorable tax rate while boosting domestic tourism. However, as of 9 January 2023, there is only one unified account on each SZÉP Card, while sums previously wired to the various pockets can be used with every provider that accepts this payment method, regardless of what is purchased.
What is flat-rate taxation in Hungary? Flat-rate taxation is one of the most popular tax regimes among freelancers in Hungary, which lets them declare a certain percentage of their income as their expenses instead of meticulously collecting invoices and calculating costs. However, the main changes to this scheme are caused by the increase of the minimum wage which influences both the monthly minimum contributions and the tax-exempt income threshold, while the newly introduced quarterly reporting evens out taxes for freelancers whose income is not regular.
What is the local business tax in Hungary? Local business tax in Hungary depends on where the seat of a business is registered, as the tax is defined by each municipality separately. It can be between 0-2% of the revenue of the business. Starting from 2023, businesses may choose to pay the local business tax according to a revenue-based tier system instead of precise calculation.
What are the changes with billing and invoicing in Hungary? While invoices can currently be issued either on paper or electronically, the latest legislation in Hungary paves the way for issuing bills electronically too.
What is the VAT for newly built residential property in Hungary? The VAT for newly built residential property in Hungary is currently only 5%, and it will remain so for at least another 2 years. It will apply to projects where the construction permit is issued by 31 December 2024.
What services does Helpers Hungary provide? Helpers Hungary has been assisting foreigners moving to Hungary for more than 15 years. They provide a wide range of services such as business setup, accountancy, residency and work permit application, as well as citizenship application. They work with both the personnel of major corporations as well as small business owners and private individuals.