Moving to Hungary or already living here with your family? Explore the benefits of the Family Tax Allowance in Hungary. In collaboration with Horizon Solutions, a trusted tax consulting company, Inter Relocation now offers expert guidance on Hungarian tax rules through our informative blog. Maximize your tax benefits as an expat in Hungary and enhance your family’s relocation experience. Have questions about relocation matters? Contact us today for personalized assistance.
Hungary offers a Family Tax Allowance with dependents, which can also be claimed by expatriates. This tax base allowance reduces the consolidated tax base and can be claimed depending on the number of dependents.
The amount of the tax allowance varies depending on the number of children and can be a significant reduction in taxable income.
What is the Family Tax Allowance?
The Family Tax Allowance is a tax base allowance that reduces the consolidated tax base, which the beneficiary can claim for dependents depending on the number of dependents per month of entitlement.
The parents can reduce their tax bases after their children while they are attending school. The amount of the family tax allowance in Hungary is based on the number of children, with a higher allowance for more children.
The amount of the Family Tax Allowance in Hungary is as follows:
1 child: 10,000 HUF (monthly) or 120,000 HUF (€330) per year
2 children: 40,000 HUF (monthly) or 480,000 HUF (€1,300) per year
3 children: 99,000 HUF (monthly) or 1,188,000 HUF (€3,300) per year
How can expatriates claim the Family Tax Allowance in Hungary?
According to the principle of equal treatment, a foreign individual may not be subject to a tax higher than that which the domestic individual has to pay on the same grounds.
A foreign individual may also take advantage of tax-related benefits, including family allowances, if at least 75 percent of their total income is taxed in Hungary and they do not take advantage of the same or similar allowance in another state for the same period.
If the foreign individual complies with the foregoing, the rules on family allowance shall apply mutatis mutandis to child benefit, disability benefit, or disability benefit under the legislation of any foreign state also in the case of another individual (entitled, dependent) entitled to similar benefits.
The children should obtain a TAX ID as well. Via self-revision, the taxpayer can reduce tax for the previous years within the statute of limitations, which is 5 years in Hungary. Horizon Solutions Ltd. can assist you in this matter.
A significant reduction in taxable income
The Family Tax Allowance in Hungary is a significant reduction in taxable income for families with dependents, including expatriates living in Hungary. It is essential to understand the rules and regulations to claim the tax allowance successfully.
If you comply with the requirements, you can benefit from the tax-related benefits that Hungary offers, including the Family Tax Allowance.
Expat in Hungary or thinking about relocating? Inter Relocation is your trusted partner for a seamless, safe, and stress-free relocation. From tenancy management to permits, we’ve got you covered. Do you have any questions or require relocation assistance? Please, contact us right away. Working with Horizon Solutions guarantees skilled tax advice. Visit Horizon Solutions’ website or connect with László Soos and Györgyi Jenei for tax inquiries.