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Autumn Tax Package - Tax Benefits May Continue to Grow

Autumn Tax Package - Tax Benefits May Continue to Grow

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The autumn tax package was submitted to the Hungarian Parliament on 12 November 2019.

The new legislative proposal recommends to combine four types of contributions – i.e. the pension contribution, in kind and financial health insurance contributions and social contribution – into one single social security contribution. As a result, from 1 July 2020 the new unified contribution would be 18.5%, which is overall the same amount. The new proposal ensures that primary producers and those in agency relationships will also be eligible for labour market benefits. This fusion of contributions will also change the share of each social security fund. Until now, it has been clear that the pension contribution is the revenue of the Pension Insurance Fund, while and the health insurance contribution is the revenue of the Health Insurance Fund. After the fusion, the tax authority will transfer 54% of the contribution to the Pension Fund, 37.9% to the Health Insurance Fund, and the remaining 8.1% to the National Employment Fund.

Another important element of the tax package is to allow for trusts and private foundations to open permanent investment accounts (PIA) for the purpose of distributing the assets to the individual beneficiary. In this context, the financial assets received by the individual will not be categorized as an income if he/she obtains the profit derived from PIA. Furthermore, the proposal extends the scope of property acquisition stamp duty allowances to private foundations, thus unifying the levy exemptions of the trust and the private foundations.

By Eszter Kamocsay-Berta, Managing partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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