Many tax benefits will no longer apply to third-country nationals in Hungary from 2025
Hungary’s tax laws offer various tax benefits to eligible residents, with significant updates recently affecting third-country nationals. While the family tax allowance was accessible to many, offering substantial support based on the number of dependants, changes coming into effect from 2025 will exclude third-country nationals from several key allowances.
Tax benefits in Hungary
In Hungary, third-country nationals were eligible for certain tax benefits, particularly the family tax allowance, provided they met specific conditions. To qualify, at least 75% of their annual income had to be taxable in Hungary, and they should not have received similar benefits from another country for the same period. The family tax allowance was available for dependants, including children eligible for family support and unborn children during pregnancy.
The allowance amount varied based on the number of dependants, with increased benefits for permanently disabled or severely ill children. This allowance could be claimed either through an employer’s tax advance declaration or during the annual tax return process. However, since August 14, 2023, third-country nationals are no longer eligible for the social contribution tax allowance that employers could previously claim for newly entering the labour market.
Big changes in 2025
The recent amendments to the Hungarian income tax laws, as outlined in the Magyar Közlöny, introduced several significant changes affecting third-country nationals. One of the key updates is related to the family tax allowance, which has been adjusted to provide increased financial support based on the number of dependants. For instance, the allowance for one dependant rose to HUF 133,340 (EUR 325.25), while for two dependants, it increased to HUF 266,660 (EUR 650.47), and for three or more dependants, it reached HUF 440,000 (EUR 1,073.30) per month.
The amendments specified that both EEA citizens and citizens from non-EEA countries bordering Hungary are eligible for these tax benefits. However, it is important to note that third-country nationals are no longer eligible for social contribution tax allowances that were previously available to employers hiring new workers from outside the EU. From 1 January 2025, they will no longer be eligible for the tax credit for starting a life. However, it is still not clear whether third-country nationals would be still eligible for the family tax allowance.
We will keep our readers updated on the topic as we gain more information.
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