The deadline for preparing the annual financial statements is May 31 each year. As the end of the month approaches, it’s once again time to carefully consider dividend-related decisions.
Dividends can only be decided upon after the financial statements have been approved, which is why it is crucial for companies to complete their reports on time and ensure the shareholders’ meeting adopts the necessary resolutions regarding the use of after-tax profit.
Dividend or Retained Earnings?
When approving the financial statements, shareholders decide whether:
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the after-tax profit will be distributed as dividends, or
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the profit will be transferred to retained earnings and not paid out as dividends.
A decision regarding dividends can only be made once, immediately following the approval of the financial statements. The resolution on dividend distribution must be filed together with the approved financial statements – and if applicable, the auditor’s report as well.
Taxation of Dividends
For private individuals, dividends paid in the 2025 tax year are subject to:
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15% personal income tax, and
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13% social contribution tax (SCT) up to a certain limit.
Social contribution tax must be paid on dividends until the total income subject to SCT (including salary, member income, rental income, dividends, etc.) reaches 24 times the minimum wage.
Once this income cap is exceeded, only the 15% personal income tax applies to dividends. The SCT cap is calculated based on the total of all SCT-liable income as defined by the Hungarian Social Contribution Tax Act.
Want to Know How Much Dividend Tax You Owe?
You can find our Dividend Tax Calculator on our website here:
👉 https://mgi-bpo.hu/szakmai-hirek/osztalekado-kalkulator/
We Help You Navigate Dividend-Related Issues
The legal, accounting, and tax aspects of determining and distributing dividends can be complex – especially considering deadlines and documentation obligations.
The MGI-BPO team offers up-to-date expertise to help clients make the most secure and effective decisions in these matters.
Don’t hesitate to contact us if you need assistance with:
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accounting services,
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preparing dividend-related decisions, or
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fulfilling tax obligations.
We provide tailored solutions and proactive advice to support your business.
