Family Tax Benefits in Hungary: Unlock Thousands of Euros

Unlock Thousands of Euros in Family Tax Benefits for Foreign Workers in Hungary – Even Retroactively Through Self-Revisions

There are various tax benefits available in Hungary, like family tax benefit, that foreign workers may not be fully aware of, yet these advantages can offer substantial financial relief to expatriate families over the years. For instance, you could save in tax through family tax benefit approximately EUR 308 per year with one child, EUR 615 with two children, or up to EUR 3,046 annually with three children. On top of this, the 2021 tax rebate can provide an additional maximum benefit of EUR 2,074, creating a significant total.

The best part? These benefits (family tax benefit) aren’t lost if missed initially; they can still be claimed retroactively through a self-revision process, as long as the statute of limitations allows. Time is running, so don’t miss out on these valuable tax advantages. Contact our experts today to make the most of these opportunities!

Below, we’ll simplify and explain these excellent tax benefit options.

Family Tax Allowance – Ongoing Support

• What is the Family Tax Allowance?

The Family Tax Allowance (family tax benefit) reduces the tax base, and the eligible person can claim it monthly based on the number of dependents (children).

• Who is eligible for the Family Tax Allowance?

Those entitled to family allowance, as well as their non-eligible spouses living in the same household, foster parents, and the spouses of guardians. Pregnant women and their spouses living in the same household may also qualify starting from the 91st day of pregnancy.

• What if someone does not receive the family allowance?

The Family Tax Allowance can still be claimed even if the individual is eligible for family allowance but has not requested its disbursement.

• Family Tax Allowance (family tax benefit) amounts:

For 1 child: HUF 10,000 per month (~EUR 26), annually HUF 120,000 (~EUR 308).
For 2 children: HUF 20,000 per month (~EUR 51), annually HUF 240,000 (~EUR 615).
For 3 or more children: HUF 99,000 per month (~EUR 254), annually HUF 1,188,000 (~EUR 3,046).

• What is considered a qualifying month?

The Family Tax Allowance can be claimed for any month in which the individual qualifies for at least one day.

• Can the allowance be shared?

Yes, if one person is entitled to the family tax benefit, she/he can share it with their spouse or domestic partner living in the same household.

• Can foreign nationals claim the Family Tax Allowance?

Under Hungarian law, foreign nationals and citizens are entitled to the same tax treatment as residents if at least 75% of their income is taxable in Hungary and they do not claim similar benefits in another country. The allowance can be claimed on income from non-independent work, independent activities, or pensions.

• Family Contribution Allowance

If the allowance exceeds the personal income tax base, the excess can be claimed from the social tax.

• How to claim the Family Tax Allowance

It can be claimed during the year via tax advances or at year-end in the tax return. If missed, it can still be claimed retroactively through self-assessment.

One-time Opportunity: Family Tax Refund in 2021

• One-time Tax Refund

In 2021, families with children were eligible for a one-time tax refund.

• Eligibility Requirements

Two conditions must be met: the individual must have been eligible for the Family Tax Allowance at any time in 2021 and must have had income eligible for the allowance.

• Refund Amount

During the tax refund, taxpayers received back the full amount of tax calculated at the 15% personal income tax rate, up to a maximum of HUF 809,000 (approximately EUR 2,074).

• Are foreign nationals eligible for the refund?

Yes, foreign nationals may also be eligible for the refund if they qualify for the Family Tax Allowance under Hungarian law.

• Can the refund be claimed retroactively?

Yes, the tax refund can still be claimed retroactively through self-assessment.

Summary

Family tax allowances and the one-time 2021 tax refund can amount to significant sums over multiple years, especially for foreign workers who qualify. It is crucial to carefully consider individual eligibility and tax implications. If you wish to take advantage of these opportunities, seeking professional advice is highly recommended.