2018. 08. 02. 12:18
On 20 July 2018, the Hungarian Parliament voted in favour of certain amendments to tax laws with effect from 2019, including the new Act LII of 2018 on Social Contribution Tax, which will come into force on 1 January 2019.
An important change is that the healthcare contribution (“egészségügyi hozzájárulás”, abbreviated as EHO) liability will cease to exist, and social contribution tax (szociális hozzájárulási adó, abbreviated as SZOCHO) will be payable instead, among others, on dividends (Section 66 of the Personal Income Tax Act).
According to the current legislation, healthcare contribution is payable on dividends at a rate of 14% as long as the total amount of healthcare contribution (EHO), national health insurance contribution (“egészségbiztosítási járulék”) and health care service contribution (“egészségügyi szolgáltatási járulék”, HUF 7,320 in 2018) deducted/paid in the given year reaches HUF 450,000. This amount is thus the current upper limit of contribution liability.
With regard to dividends, the upper limit of social contribution tax liability is also established by the new act. Thereunder, social contribution tax is payable at a rate of 19.5% as long as the specific income of a natural person reaches twenty-four times the minimum wage in the year concerned.
The Government has not yet established the amount of minimum wage for 2019, but even if next year’s tax liability is calculated using the current minimum wage (HUF 138,000/month), the upper limit of social contribution tax liability will increase by HUF 195,840.
Of course, this construction will be more favourable than the current one for those with an income exceeding twenty-four times the minimum wage.