Changes in the regular work schedule related to public holidays in 2014
1. 10 May Saturday working day
May 2 Friday day off
2. 18 October Saturday working day
24 October Friday day off
3. 13 December Saturday working day
24 December Wednesday day off
Family allowance extended
From January 1, 2014 the total amount of family allowance can be deducted not only from the tax but also from individual contributions. Having established the amount of the allowance, we reduce the personal income tax base. After defining 16% of the unused family allowance, the remaining amount can be claimed on the following order: 1) 4% health insurance contribution in kind, 2) 3% cash health insurance contribution, 3) 10% pension contribution.
Depending on the number of dependents, the consolidated tax base can be reduced, for each beneficiary dependent and eligible month, HUF 62,500 for one and two dependents respectively, HUF 206,250 for three and more dependents. It means net HUF 10,000 surplus-saving in tax per month in case of the first and second child and net HF 33,000 in case of the third and more children.
Those entitled to family allowance and the spouse and unmarried partner of the insured can make use of it. The allowance can be made use of jointly as well between those eligible and at the end of the year it can be shared with the spouse or the unmarried partner. Share is possible between an eligible and their ineligible spouse or unmarried partner
An example of family allowance jointly made use of and shared
A couple with three children get divorced in April and afterwards the mother raises the children. The mother get into an unmarried relationship in September. The father can make use of the allowance in his return jointly with the mother for the first four months. The mother shares the family allowance with her unmarried partner from May to December. In the return the number of months when the allowance is shared or jointly made use of and the tax identification number of the other individual shall be indicated and it shall be stated in which months the beneficiary dependent was considered a dependent or beneficiary dependent.
Family allowance cannot be made use of in case of the pension contribution of child care allowance.
In case of social entrepreneurs and the self-employed family allowance can be made use of only from the income actually established, that is from the payable personal contribution fee and not from the minimum contribution base.
The allowance can be made use of only once in case of more than one entitled.
If an individual does not declare if they do not wish to make use of the family contribution allowance, the employer shall establish it. If the insured has made use of the family contribution allowance monthly, and income tax liability is established after their consolidated tax base (for example, in addition to the monthly gross wage of HUF 100,000, they receive a one-time assignment fee of HUF 500,000 in November), they do not pay back the family contribution allowance, but will be required to pay income tax.
If the allowance was made use of unduly, it must be paid back with a 12% incremental penalty, if the difference is more than HUF 10,000.
An example of making use of family contribution allowance
The monthly wage of the head of the family is HUF 500,000, the wife is at home raising their four children; all four children are considered to be beneficiary dependent. The head of the family declares that he wishes to make use of the total tax and contribution allowance. Compared to 2013, his net wage will be as follows:
Name 2013 2014 Monthly wage Monthly family allowance
1. Monthly wage 500 000 HUF 500 000 HUF 500 000 HUF 825 000 HUF
2. Family allowance made use of 500 000 HUF 500 000 HUF
3. Income tax base less the family allowance (1. – 2.) – –
4. Payable income tax (3. x 16%) – –
Family contribution allowance
5. Family allowance according to the income tax law 825 000 HUF 825 000 HUF
6. Family allowance made use of in the income tax (2.) 500 000 HUF 500 000 HUF
7. Family contribution allowance ((5. – 6.) x 16%)) – 52 000 HUF
8. Health insurance contribution in kind (1. x 4%) 20 000 HUF 20 000 HUF
9. Family contribution allowance made use of – 20 000 HUF
10. Health insurance contribution in cash (1. x 3%) 15 000 HUF 15 000 HUF
11. Family contribution allowance made use of – 15 000 HUF
12. Deducted health insurance contribution in kind and cash 35 000 HUF –
13. Labor market contribution (1. x 15%) 7 500 v 7 500 HUF
14. Pension contribution (1. x 10%) 50 000 HUF 50 000 HUF
15. Family contribution allowance available to be made use of from pension contribution ((the minimum of lines 14. and (7. – 9. – 11.) – 17 000 HUF
16. Deducted pension contribution (14. – 15.) 50 000 HUF 33 000 HUF
17. Total taxes and contributions (4. + 12. + 13. + 16.) 92 500 HUF 40 500 HUF
18. Net income (1. – 17.) 407 500 HUF 459 500 HUF
The increase in net income – 52 000 HUF
Source: HVG – TAX 2014 special edition
Social contribution tax relief
In case of a full-time employee, the following two reliefs can be chosen up to as maximum sum of HUF 100,000 (in case of part-time employment pro rata temporis of up to HUF 100,000):
1. 27% social contribution allowances:
a. employees under 25, school leavers,
b. the long-term unemployed (in the first two years of employment),
c. employees employed after/during the disbursement of child-care payment, childcare allowance, and child-rearing allowance (in the first two years of employment),
d. employees raising three or more children, after/during the disbursement of child-care payment, childcare allowance, and child-rearing allowance (in the first three years of employment),
e. enterprises operating in free enterprise zones (temporary employers are excluded) (in the first two years of employment).
2. 14,5% social contribution allowances:
a. employees in unskilled jobs,
b. non school leavers under 25, employees over 55,
c. the long-term unemployed (in the third year of employment),
d. employees employed after/during the disbursement of child-care payment, childcare allowance, and child-rearing allowance (in the third year of employment),
e. employees raising three or more children, after/during the disbursement of child-care payment, childcare allowance, and child-rearing allowance (in the fourth and fifth year of employment)
f. enterprises operating in free enterprise zones (temporary employers are excluded) (in the third year of employment).
27% social contribution allowance is due after the employment of researchers monthly up to a maximum sum of HUF 500,000 (in case of researchers, developers with PhD or higher academic degrees).
14,5% social contribution allowance is due after the employment of researchers monthly up to a maximum sum of HUF 200,000 (in case of doctoral students and doctoral candidates).
17% social contribution allowance is due for non-graduates with START Card monthly up to 150% of the minimum wage, up to a maximum of 2 years until the age of 25 of the employee, until December 31, 2014.
7% allowance is due for non-graduates with START Card monthly after the wage or up to 200% of the minimum wage and for the part-timers who are returning to the same or similar work of 20 hours after receiving maternity care.
Also, 27% allowance is due up to 200% of the minimum wage for those having a rehabilitation card and after entrepreneurs with altered working abilities.
Social contributions not available after January 1, 2014
– Tax relief aimed to preserve the net worth of wages
– START CARD GRADUATES
– START PLUSZ
– START EXTRA
– START BÓNUSZ
Childcare allowance extra is coming
The conditions of employment beside receiving child care allowances become more favorable, so after the child is one year of age, work can be carried out indefinitely not only beside childcare payment, but also beside childcare allowance. With this allowance, the government would like to encourage childbirth and the return of parents with small children into the labor market.
It is possible that in case of having more children, the allowances due for each child be disbursed parallel (e.g. making use of childcare allowance and prenatal allowance at the same time). It also applies to children born before it enters into force, if a new child in born in the family after January 1, 2014.
A new element is that full-time students in higher education and fresh graduates are also entitled to receive childcare allowance under certain conditions.
Employees of mothers of three or more children will receive additional tax benefits.
It has also been fixed in the law that the parents of twins are eligible for childcare allowance a year longer until the child is maximum 3 years old.
Insurance of professional trainees
University and college graduates employed in (summer) internship are entitled to remuneration if it reaches 6 weeks en bloc. Its rate is at least 15% of the minimum wage per week, which is free of tax and contribution up to the amount of the minimum wage per month.
Accordingly, from 2014 during the internship the students working on the basis of a student contract are not covered by insurance, so no contributions or social contributions shall be paid after them.
Tax on fringe benefits remain the same
In respect of fringe benefits, neither the limit nor the taxes will be raised in 2014, thus still 16% income tax and 14% health care contribution shall be paid after 1.19 times of the value of the benefit.
Change: tickets and passes for sporting events have been tax-exempt up to the amount of HUF 50,000/year so far. From 2014 it can be given indefinitely in case of any paying agents.
The definition of voucher has changed: the legislature clarifies that benefits given in the form of vouchers, if redeemable or redeemable for cash, is considered to be a benefit.
The possibility of cost accounting has been terminated in case of letting of properties
The possibility of cost accounting will be terminated from 2014 after income exceeding HUF 1 million from letting of properties, so 14% of health care contribution shall be paid on the total amount.
Health care contribution will increase
From January 1, 2014 health care contribution of the non-insured will be increased by HUF 150 to HUF 6,810.
No health care contribution shall be paid by self-employed retired people who work at least 36 hours a week and by corporate businesses after such employees. Thus, in the absence of actual income, the self-employed retired will have no contribution obligation.
Higher pension and sick pay to small-tax payers (itemized tax of enterprises with a small tax base)
Enterprises may pay a higher amount of itemized tax, HUF 75,000 after full-time small-tax payers, so small-tax payers may qualify for more pension and sick pay. The basis of the social security and unemployment benefits can be HUF 136,250 in this case.