The 2025 amendments adopted by the Hungarian Parliament introduce significant changes to tax regulations, particularly focusing on personal income tax, family benefits, housing allowances, recreational programs, and company car taxation. Below is a detailed overview of the key changes by area.
Changes Related to Family Benefits
The tax changes aimed at improving the situation of families raising children focus on increasing the family allowance, which will be implemented in two phases. The first phase will take effect on July 1, 2025, when the family allowance for dependent children will increase by 50% over the current amount. In practice, this means net savings of HUF 15,000 for one child, HUF 30,000 for two children, and HUF 49,500 for three children per month, per child. An additional HUF 15,000 in net monthly savings may apply to children with disabilities.
Subsequently, on January 1, 2026, the allowance will increase further, resulting in a total doubling of the current benefit. Accordingly, a family with three children eligible for the allowance throughout the year could enjoy additional net income of HUF 2,376,000 (3 × 66,000 × 12) annually in the form of tax and contribution savings, provided their income is sufficient to fully utilize the allowance.
Changes Related to Housing and Real Estate
The primary aim of the housing-related modifications is to support young employees starting their careers. The legislative amendment allows employers to provide rental or mortgage repayment support to employees under 35 years old, up to a monthly amount of HUF 150,000, under preferential tax conditions. This amounts to HUF 1.8 million annually for full-year employment, provided the employee submits the rental or loan contract to the employer. This benefit qualifies as a “fringe benefit”, while amounts exceeding the stated limit can be provided as “specific allowances”, both are subject to lower tax rates compared to regular wages. The detailed conditions for this benefit are to be regulated in a forthcoming decree.
Furthermore, balances already present on SZÉP cards on January 1, 2025, along with employer contributions to these accounts during 2025, can be used for housing renovation expenses, up to 50% of the aggregated amount. The specific products and services eligible for use will be defined in the SZÉP card regulation.
All the above benefits can be provided to employees with more favorable tax rates than regular wages. However, it is important to introduce these benefits while observing the general prohibition of substituting wages, meaning that these benefits cannot replace salary increases.
Another option for housing support is that from 2025, amounts accumulated in voluntary pension fund accounts may be used for housing purposes tax-free, provided the funds are spent in compliance with the relevant provisions of the voluntary mutual insurance funds law.
In the area of short-term rentals, significant changes are expected starting January 1, 2025. Based on prior government statements, issues related to short-term rentals are primarily seen as housing concerns, and thus, the amendments aim to address these problems, particularly in the capital city. Individuals engaged in short-term rental activities (e.g., Airbnb hosts) may opt for simplified flat-rate taxation if they operate in no more than three properties owned or held under usufruct rights. In locations where the number of guest nights exceeds two million annually, the flat-rate tax will increase to HUF 150,000 per room annually (approximately four times the current amount). In other areas, this amount will remain HUF 38,400. The tax authority will publish a list of affected locations annually by January 31, based on the number of guest nights.
The government expects that these changes will encourage private individuals to rent out their properties on a long-term basis instead. As a result, increased supply may lead to lower rental prices for long-term leases. Additionally, if these changes prompt more property owners to decide to sell, it could slow the increase in property prices. It is important to examine the local government regulations alongside national laws to fully understand the framework governing short-term rental activities in a given location.
Tax Changes Supporting Recreational Programs
Support for recreational programs will bring positive tax changes starting in 2025. The SZÉP card will be expanded with a new “Active Hungarians” pocket, designed to encourage physical and mental well-being of people in Hungary. Employers may contribute up to HUF 10,000 per month, or HUF 120,000 annually, to this pocket for active lifestyle-related services as a fringe benefit. Amounts exceeding this limit will be classified as specific allowances.
In addition, services provided through free or discounted use of sports facilities maintained by employers, including sports equipment there, will become tax-exempt. However, this exemption will not apply in cases where the employer rents office space and purchases passes for employees to gyms operating within the same building anyway.
Furthermore, alongside sports and cultural tickets, zoo entry passes will be explicitly designated as tax-exempt benefits, although this exemption could previously be inferred through legal interpretation.
Timing of income recognition for purchased services
The tax date of income earning of purchased services will be modified so that it will be determined by the date the supporting document is made available to the payer. This change simplifies processes and avoids self-correction tasks. However, it does not fully address cases where the employer pre-purchases services but only distributes vouchers or passes to employees at a later time. The intention appears to be maintaining the income recognition date as the date when the individual becomes entitled to use the service.
Interest and place of income earning
From January 1, 2025, the personal income tax law will also determine the income- generating place of interest income for taxation purposes. This is favorable news for Hungarian individuals residing in the United States, as it allows U.S. taxes on income (e.g., investment fund yields or insurance payouts) to be credited against Hungarian personal income tax liabilities, even if the income does not qualify as interest but is considered interest income.
For employment contracts established on or after January 1, 2025, the duration of the social contribution tax exemption for employees entering the labor market will be reduced from three years to 1.5 years, and the definition of “employees entering the labor market” will be tightened with additional conditions regarding insurance periods. This amendment merely codifies rules introduced during the emergency period and does not introduce new measures compared to current regulations.
To encourage long-term investments in savings accounts, if a Long-Term Investment Account (TBSZ) is closed prematurely (i.e., before the 1+5-year term), social contribution tax will also apply. The rate will be reduced from the general 13% to 8% if the holding period reaches at least 1+3 years.
From January 1, 2025, the eligibility for tax base allowances for first-time married couples and individuals under 25 will be restricted to citizens of EEA countries and third countries neighboring Hungary (e.g., Serbia, Ukraine). Citizens of third countries not bordering Hungary will no longer be eligible.
Additionally, the legislative amendment allows employers to apply for tax identification numbers on behalf of foreign workers who do not already have them. Previously, this was only possible in cases of ad hoc payments.
Significant increases are being introduced in company car tax. From January 1, 2025, company car tax rates will increase by approximately 20%, and inflation-adjustment rules will be introduced for both motor vehicle tax and company car tax, allowing for automatic rate increases tied to inflation without further legislative amendments. This increase may negatively impact company cars (as benefits) that are otherwise exempt from personal income tax. Another notable change is that hybrid and plug-in hybrid vehicles will lose their company car tax exemption starting in 2025. However, vehicles registered before January 1, 2025, will retain this exemption until December 31, 2026, under transitional provisions.
Although not directly resulting from the legislative amendments, it is worth noting that SZÉP cards will be usable in digital form, such as through a mobile application, by September 1, 2025, at the latest.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Roland Szabó
Director
Dénes Megyesi
Director
Mónika Keztyűs
Senior Manager
Andrea Cziegle-Gérecz
Manager
Erzsébet Varga
Manager
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