Benefits for Children for foreign Employees in Hungary
The same tax advantages are available to foreign workers living in Hungary under a work permit as they are to Hungarian residents. This also holds true for child benefits, which may be important if a worker's family is also residing in Hungary as part of a family unification programme.
The idea of equality of treatment
Equal treatment in tax matters means that a foreign national living and working in Hungary cannot be subjected to a higher tax burden than a Hungarian national in the same situation. This also holds true for tax advantages, such as child benefits, so long as at least 75% of the employee's income is earned in Hungary.
Hungary's dependent children
You can apply for child benefits in Hungary if both you and your children reside in Hungary legally, for a long term.
For the applicant:
- EEA citizens need a registered address in Hungary
- Non-EEA citizens need a work permit valid for at least 6 months, or an intra-corporate transfer permit for at least 9 months
At the same time, children of the applicant must:
- be minors (under 18)
- be dependent on the applicant
- live in the same household in Hungary as the applicant (so if you live in Hungary and your child lives in your country of origin, you are not eligible)
- attend kindergarten or school in Hungary if they are the right age (at least 3 years old)
Child benefits are available in Hungary while working
In Hungary, there are several types of child benefits available. The most significant ones that have a significant impact on an employee's pay are listed below. When both parents are employed in Hungary, some of them can be split between the two. For more information, be sure to speak with your accountant.
1. Family allowance (“családi pótlék”)
This is an allowance your employee may receive directly from the state every month. It can be requested either through the employe or directly from the government; in either case, your accountant can probably help your employees take care of the application. Moreover, other child benefits are often defined on the basis of eligibility for the family allowance.
The sum of the family allowance depends on the number of eligible children, and whether you are raising your children together with your partner or as a single parent.
| number of children | raised by two parents | raised by a single parent |
| 1 | HUF 12,200 / child | HUF 13,700 / child |
| 2 | HUF 13,300 / child | HUF 14,800 / child |
| 3+ | HUF 16,000 / child | HUF 17,000 / child |
2. Family tax benefit (“családi adókedvezmény”)
This tax benefit is relevant for calculating the net salary of your employee in Hungary. It is based on how many children the employee has who are eligible for the family allowance. As a result, employees who receive the family allowance should keep your accountant up to date about their status so their salaries may be calculated right.
Based on the number of children, the net salary of the parent can increase by HUF 10,000, 20,000, 33,000, or even more. Since this is not an allowance but a tax benefit, it can only be used to reduce taxes. As a result, if both parents work in Hungary, it makes sense if the parent earning more applies for it to maximize the family income.
3. Personal income tax exemption for mothers of four (“NÉTAK”)
This is another tax benefit relevant for salary calculation, since you as the employer will not have to deduct the personal income tax from the gross salary of your employee. This tax benefit is only available to women who have at least 4 dependent children eligible for the family allowance. Moreover, women remain eligible even after their children grow up, providing they were eligible for the family allowance for at least 12 years each. Employees who are eligible should let your accountant know so their salaries may be calculated right.
The sum of this child benefit equals 15% of the gross salary of the employee, since it is an exemption from the personal income tax, which is 15% in Hungary.
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