Simplified employment (EFO)

Currently, the net daily income of a film industry extra from casual work cannot exceed 18,000 forints, but under the bill this amount will rise to 12 percent of the minimum wage, i.e. 27,800 forints. The rate of tax payable by the employer will also change, the tax rate will be the following for each day of employment per employee:

• for seasonal agricultural and tourism work, the 0.5 percent of minimum wage valid on the first day of the month in question (HUF 1,200), instead of the current HUF 500,
• for casual work, instead of the current HUF 1,000, the 1 percent of the minimum wage valid on the first day of the month in question (HUF 2,300),
• for film industry extras, instead of the current 4,000 HUF, the 3 percent of the minimum wage valid on the first day of the month in question (7,000 HUF).

The tax authorities will publish the above rates on their website after the minimum wage changes. The basis for calculating the EFO employee pension will also increase with the increase in the EFO tax.

Social contribution tax

The provision states that the labour market entrants’ allowance is not available to guest workers employed under the Act on the Employment of Guest Workers in Hungary.

Furthermore, under the current rules, income earned as fringe benefits or certain defined benefits by a person who qualifies as a foreigner under the Social Insurance Contributions Act is not subject to the social contribution tax payment obligation. The social security situation of guest workers will, however, be different, given that they will be insured here with respect to their employment in Hungary, while their foreign status under the Social Insurance Act will be maintained. It would be unjustified to grant the social contribution tax benefit, thus the bill provides that guest workers will be subject to social contribution tax on income earned as fringe benefits or certain defined benefits.

With regard to the tax relief available for persons with reduced working capacity, the bill adds – in order to ensure equal opportunities – persons receiving disability allowance or personal allowance for the blind to the list of persons eligible for partial relief from social contribution tax in the case of employment.

The bill unifies the rules on tax relief from vocational training contribution for vocational education that can be used in connection with participation in vocational education and dual training and links it to the time actually worked on such activities. In this way, fractional days are not taken into account as whole working days.

Under the bill, the tax relief will be available on a pro rata basis. The tax credit will no longer be calculated by multiplying the pro rata amount of the cost per working day by the number of working days in the month concerned, but also by the ratio of the number of hours of training per working day to the number of hours of a whole working day (or 7 hours per day in the case of a young worker).

Accordingly, after the amendment, the tax relief will no longer be a general allowance per working day, but will be available on a pro rata temporis basis, i.e. pro rata on 8 (or 7) hour working day. It will ensure that the maximum amount of the tax credit will not be available if the specialised training is only a few hours per working day.

In line with the contribution rules, a private entrepreneur who suspends his activity must also pay social contribution tax for the whole month, even in months when he does not suspend his activity for the whole month. This means that there is no longer a need for in-month prorating (thirty-folding) if the cessation only lasts for part of the month.

Simplified contribution to public revenues (EKHO)

EKHO can usually be applied to the legally defined part of the income of people working in the arts, culture and theatre, as well as sound engineers, video technicians and other telecommunications professionals working in concerts and studios, coaches, sports organisers and professional sportsmen and women.

According to the provision, from 1 July 2023 the employer will no longer have to pay the 13% EKHO, thus the rule, already applicable since 1 September 2022 under the Emergency Government Decree, now has been raised to the level of the law.

Our newsletter includes general information, please contact our colleagues for personalized advice or interpretation of the law.