The government has submitted to Parliament bill no T/4243 on the planned tax changes. In the following we present the changes with impact on personal income tax.

Benefit for mothers under 30

A new element, the benefit for mothers under 30, will be added to the range of benefits available under the personal income tax system. The benefit for mothers under 30 will be available after the benefit for mothers of four or more children and after the benefit for young people under 25, but before the personal allowance, the first-married couples’ allowance and the family allowance. The benefit is effectively a continuation of the benefit for under 25 but for mothers aged 25-30.

The benefit is available to young mothers who are entitled to a family allowance in respect of their biological or adopted child or their child not yet born. The benefit can be applied to the same types of income as the benefit for young people under 25, i.e. salaries, private entrepreneur’s entrepreneurial payment, flat-rate income from a flat-rate taxpayer or income from an engagement contract.

The income base for the benefit – also similar to the benefit for young people under 25 – must not exceed the average gross earnings at the level of the national economy for the month of July of the year preceding the year in question (HUF 499,952 for the month of July 2022). If the benefit is claimed, it should be declared to the authorities. Young mothers may first make the advance tax declaration for the month following the month in which they reach the age of 25 in order to claim the benefit for mothers under 30.

Receiving an increased family allowance

The family allowance taken after children can be claimed for each child who qualifies as a permanently ill or severely disabled person under the Act on Family Support, in an amount increased with HUF 66,670 per month of entitlement and per child. In practice, this means that the tax burden of a parent claiming the benefit for a child who is considered to be permanently ill or severely disabled is reduced by HUF 10 000 per child per month.

This benefit can be claimed already in 2022 on the basis of an emergency government decree, and the bill introduced this change in the Personal Income Tax Act.

Taxation of assets held in fiduciary asset management (trust)

Under the current provisions of the Income Tax Act, an individual who assigns assets to a trust or private foundation is not liable to pay tax on the assignment of the assets, and if the beneficiary of the trust or private foundation receives a benefit in cash or in kind from the assets under management or the assets of the private foundation (i.e. from the capital part and not from the return on the assets), the value of the assets thus acquired is currently tax exempt.

The essence of the proposed new legislation is that a sale is deemed to take place if the settlor, based on fiduciary asset management, or the founder, in the case of a private foundation, assigns assets owned by the person joining the foundation to a trust or transfers them to the private foundation. The proposal provides that the income from the sale is the value of the transferred / assigned asset at which it was recorded in the books of the transferee (asset managed or foundation). The acquisition value of an asset acquired from the sale of an asset may be deducted from the income (to be determined as above) in the calculation of income in accordance with the general rules of the Income Tax Act.

Income from crypto-assets

The bill confirms that transaction losses in crypto-asset transactions can be recognised even if the individual has not received any income from the crypto-asset transaction in the year. The significance of this is that, as with controlled transactions, losses on crypto-assets in the current year can be used to reduce profit in the following years. The amendment thus allows the loss in the current year to be used as a tax offset in later years, even if the transaction did not generate any income in the current year.

Termination of SZÉP card sub-accounts

The amendment now incorporates a change previously adopted in the emergency government decree into the Personal Income Tax Act, which eliminates the sub-accounts for SZÉP card benefits. The provision clarifies, in the context of the abolition of SZÉP Card sub-accounts, the definition of the part of the employer’s benefit to the Széchenyi Pension Card that is taxable as fringe benefits or certain defined benefits. Accordingly, the part of the employer’s benefit of SZEP card that does not exceed the recreational cap amount (HUF 450,000 or a proportional part thereof) is considered to be a fringe benefit. As a result, the HUF 150,000, HUF 75,000 and HUF 225,000 sub-account ceilings are no longer needed to determine the annual ceiling for fringe benefits, as both the sub-accounts and their ceilings have been abolished.

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