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Expected Changes in Hungarian Taxation as of 2022, Personal Income Tax Refund to Families with Children

Expected Changes in Hungarian Taxation as of 2022, Personal Income Tax Refund to Families with Children

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Extended loan moratorium, tax return for families, exemption for personal income tax for young adults under 25, new pension premium are the most important tax changes in connection with the central budget as off 2022.

The Hungarian Government has decided to extend the moratorium on loan repayments for vulnerable borrowers until 30 June 2022. Based on the decision, pensioners, families expecting and raising children, public workers and people whose incomes have fallen compared with last year will be eligible for continued participation in the moratorium from November 2021.

By 15 February 2022, the Government will refund a portion of personal income tax to parents raising children. Those who perform work within the framework of employment relationship will get back the full amount of the personal income tax paid in 2021. The maximum amount of the refund is the 15% of the average annual salary. The entrepreneurs will also benefit from the refund; KATA taxpayers will receive a quarter of their flat-rate tax, while EKHO taxpayers will receive the 9.5% of the tax paid.

The tax authority will transfer automatically the refund to the employees, provided that it has all the information necessary for determining the amount of the refund. Otherwise, the taxpayers (especially the entrepreneurs) shall make a declaration before 31 December 2021. The tax authority will transfer the tax refunds before 15 February 2022.

People below the age of 25 will be exempted from paying the personal income tax, while in early 2022 military and law enforcement personnel will get a special allowance for six months. Approximately HUF 720,000 per year of saving can be realized due to tax exemption for a 20-year-old entrant with current average wage.

By Eszter Ila-Horvath, Attorney at Law, 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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