Hungary Outlines New Family Tax Savings

by Lorys Charalambous, Tax-News.com, Cyprus

23 December 2013

Hungary says that an extension to the family tax allowance system will introduce tax savings of up to 33 percent of the gross wage, and benefit more than 270,000 households to a total of HUF50bn (USD228m).

At a press conference, Tax and Financial Affairs Minister Gábor Orbán explained that any remainder of the tax allowance that was not deductible from the personal income tax base could be taken from the 7 percent healthcare insurance contribution and/or the 10 percent pension contribution. The extension aims to benefit households with three or more children, as well as families with one breadwinner and two children.

Since 2011, tax breaks have been extended from families with three children to families with one or two children, along with further breaks for each extra child above three. Last month, the Government announced extended exemptions to social and training contributions payable by employers when they employ the parents of small children.

Orbán said that Hungary's birthrate was among the lowest in the EU, and that the creation of a family-friendly personal income tax system, along with other measures to harmonize work and family, was intended to change demographic trends.

Orbán also added that the new tax system had stimulated employment and that wages had risen by 17.8 percent between 2010-2013.

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