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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

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
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  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com