2017 – Vital Changes in Taxation

A 2017 tax package has been adopted by the Parliament earlier this summer to make significant changes in 2017 taxation rules. Hereunder you find the most influential modifications that may affect your business.

Modifications in cafeteria

• Healthcare services, as new tax-free bonus given by employers, is a new optional item of 2017 cafeteria system. Services under this bonus item are yet to be defined, however, this change is expected to largely affect the entire employment benefit system;
• Health Fund Contribution along with other voluntary fund contribution services (e.g. pension fund) will fall out of the fringe benefit system resulting in 49,98% of tax charge instead of the previous 34,51%;
• Up to 100.000 HUF bonus payment is payable to employees with reduced tax charges ;
• Other 2016 cafeteria items, such as Erzsébet voucher, meal services, holiday, or back-to school benefits, local travel season tickets are getting out of the cafeteria system;

Stricter tax control

• As of 1st January 2017, invoices devoting taxes over 100.000 HUF to domestic taxable persons shall include a tax number. In 2016 the tax number had to be indicated over 1.000.000 HUF;
• Online invoicing is initiated in 2017 enhancing taxation control and monitoring system effectiveness.

Major changes in small enterprises taxation (in Hungarian: kata and kiva)

• Income limit for small entrepreneurs itemised tax (kata) is doubled from 6.000.000 HUF to 12.000.000 HUF making a big difference for those choosing this taxation in 2017. Additionally, any support granted for cost-covering or business development will not increase „kata” income from 2017.
• The regulator broadens the accessibility for „kiva” (small-enterprises tax) by increasing the number of employees from 25 to 50 with an upper limit of 100 employed. From 2017, „kiva” tax base will be rated after dividend- or capital operations instead of accumulated monetary assets of the company.