Taxation in Hungary

Taxation of Foreign Nationals in Hungary

Related links:

A PEH Tax Office website >>>

Hungary Income Taxes and Tax Laws >>>

Double Taxation Prevention Treaties >>>

Taxes and expenses when buying, letting
out and selling real estate in Hungary >>>

Taxation of Foreign Nationals in Hungary

Hungary has a progressive personal taxation system. This means that the higher the
income, the higher the rate of tax payable.
In 2006, the income tax rate in Hungary for an individual has been 18% - 36%.
Corporate tax in Hungary in 2006 is fixed at 16%.
Corporate tax for income up to HUF 5 million, about EUR 20,000 is 10%, subject to certain
conditions.

Foreign nationals living and working in Hungary are required to register as a taxpayer
there. Those who are permanently resident in Hungary are taxed on any income generated
in Hungary or overseas, while foreign residents who are living and working on a temporary
basis in Hungary are only taxed on their Hungarian income. Criteria used in defining
permanent residence for taxation purposes include the usual family place of residence,
property ownership and whether the taxpayer spends more than 183 days per year in
Hungary.

Hungary has Double Taxation T reaties with many other countries, which means that tax
paid in one country can be offset against any tax payable in the other.

Retirement pensions are not liable to tax in Hungary, whether they are paid in Hungary or
from abroad.

Employees with no other income have their tax deducted direct from salaries on a monthly
basis. Those with additional income, the self-employed and people with
overseas-generated income are required to make advance payments of tax and to
complete a tax return at the end of the financial year, at which point they must pay any
additional tax due, or are reimbursed if their advance payment exceeded the amount of tax
actually payable.

Value Added Tax is payable at a standard rate of 20%, with reduced rates of 15% or 5% on
certain items such as food, textbooks and medicines.

Local government offices are responsible for the collection of local rates.

Information for USA Expats:

US Citizen Thinking Of Accepting A Foreign Assignment? Some US Tax Matters You
Should Know Before You Accept!

The Hidden Jewel - Form 2555: Foreign Earned Income Exclusion’s Other Cousin

To Be or Not to Be Self- Employed (Versus Employed) - On a Foreign Assignment Outside
the US

Information for GB Expats:

Taxation of UK Government Service Pensions Abroad - Double taxation or not?

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or Not to Be Self- Employed (Versus Employed), On a Foreign Assignment Outside the US, Tax Treaties and How They Affect You,
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