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Hungary Tax Deductions

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 - up to HUF 4,000 per child per month, for families with at least 3 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. 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. 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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