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The tax system in Hungary permits tax relief in the form of a deduction (a reduction in the taxable income) and in the form of a direct credit of the amount of tax payable (tax credit).
Personal Deductions
An individual may receive a tax credit in the following circumstances:
- A credit as a resident - a credit for employment incomeof up to 18% of wages, on condition that the annual income does not exceed HUF 1 million.
- A credit for children - HUF 62,500 per month for families with one or two children.
HUF 206,250 per month for families with three or more children.
- Payments to insurance funds - a credit of 30%. Up to a limit.
- Repayment of loans for a residence - a credit up to a limit.
- Donations to public institutions - a credit of 30% of the amount paid up to a limit.
Hungary Business Deductions
- Offset of losses - a loss may be offset forward with no limit. There is no carry back of losses.
- Transactions between affiliated parties - parties are defined in law as affiliated
when one parties holds more than 50% of the shares of the other or has 50% or more of the control over the other.
The price for transactions between affiliated parties that are completed on payment of a sum that is significantly higher than the market price is not allowable.
- Related parties have to report the tax office about such transactions prior to the tax return.
- Consolidated Returns – A consolidated tax filing is not allowed in Hungary.
Hungary Depreciation of Fixed Assets
Depreciation is allowable at the following rates
| Class of Asset |
Annual Depreciation (%) |
| Buildings |
2-6 |
| Machinery and equipment |
14.5/33 |
| Computers |
50 |
| R&D |
50 |
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