2018 Family tax allowance (Családi adókedvezmény)

Employees with Hungarian address cards (or with a Residence Permit for the Purpose of Employment or Other Gainful Activity) who meet the eligibility requirements may receive a reduction in their income tax base via the Family Tax Allowance. To be eligible, you or your spouse* must either a) have passed the 91st day of pregnancy**; or b) have started adoption proceedings for a child; or c) have at least one child younger than school age; or d) have a child under age 20 attending school in Hungary (elementary, secondary, or full-time post-secondary vocational school). Additionally, you may not already be receiving a similar family tax benefit in another country, e.g. in the United States taxpayers can take an exemption on their tax returns for dependents.  

To receive this benefit in 2018, please apply to the payroll team by January 23, 2018 (or at the start of your employment relationship or upon reaching the 91st day of pregnancy with the required medical certificate*). If you miss this deadline, you are only eligible to claim the benefit retroactively when filing your tax return for the period between January and your benefit application date.

To apply, please print out and complete by hand the Hungarian-language application form and deliver it to the payroll team (HRO, József A. u 24, 1st Floor). Non-Hungarian speaking employees can download an English translation of the form to assist with completing the Hungarian form.

After receiving the application form, CEU will reduce your income tax base by the permissible amount each salary payment.   

You are not able to collect benefits for children who have completed secondary/high school and who attend University fulltime to earn their first degree, however, with their University enrollment documentation, these child/children count toward the total number of your dependents and enable you to collect the higher benefit rate for your other, eligible children.

You are responsible for alerting the payroll team if/when your child a) finishes secondary school or post-secondary vocational school; or b) turns 20 years old; or c) has been earning a salary for more than 3 months.

The below examples demonstrate how the benefit is calculated.

Family Tax Allowance Sample Calculations (anticipated for 2018)

a) If the employee has 1 child in Hungary (younger than school age OR attending kindergarten, elementary, or secondary school OR under 20 years old and attending fulltime post-secondary vocational school), then his/her net salary will increase by 10,000HUF/month.

b) If the employee has 2 children in Hungary:
▪ a 7 year old in elementary school (eligible); and
▪ a 16 year old in secondary school (eligible), 
then his/her net salary will increase by 35,000 HUF/month (2 x 17,500 HUF).

c) If the employee has 2 children in Hungary:
▪ a 7 year old in elementary school (eligible); and
▪ a 22 year old in University fulltime to earn their first degree (ineligible because of age, however counts towards the total number of children and enables the recipient to receive the higher benefit amount for the first child),
then his/her net salary will increase by 17,500 HUF / month (1 x 17,500 HUF).

d) If the employee has 3 children in Hungary:
▪ a 5 year old in kindergarten (eligible); and
▪ a 12 year old in elementary school (eligible); and
▪ a 19 year old attending a full-time course in a Hungarian post-secondary vocational school (eligible),
then his/her net salary will increase by 99,000 HUF/month (3 x 33,000 HUF).

e) If the employee has 3 children in Hungary:
▪ a 5 year old in kindergarten (eligible); and
▪ a 12 year old in elementary school (eligible); and
▪ a 19 year old attending University fulltime to earn their first degree (ineligible, however counts towards the total number of children and enables the recipient to receive the higher benefit amount for the first two eligible children),
then his/her net salary will increase by 66,000 HUF/month (2 x 33,000 HUF).

f) If the employee has 3 children in Hungary:
▪ a 5 year old in kindergarten (eligible); and
▪ a 12 year old in elementary school (eligible); and
▪ a 24 year old attending University fulltime to earn their second degree (ineligible and does not count towards the total number of children),
then his/her net salary will increase by 35,000 HUF/month (2 x 17,500 HUF).

g) If the employee has 3 children in Hungary:
▪ a 5 year old in kindergarten (eligible); and
▪ a 12 year old in elementary school (eligible); and
▪ a 20 year old attending University fulltime to earn their first degree who has a regular income (ineligible and does not count towards the total number of children),
then his/her net salary will increase by 35,000 HUF/month (2 x 17,500 HUF).

For questions, please contact payroll@ceu.edu or Ágnes Plózer at extension 3033.

*
a) married or cohabitating partners who are both parents (biological or adoptive) of the child/ren may split the FTC evenly or otherwise, however this is only recommended in rare cases because Hungary has a flat income tax rate, e.g. if one parent’s tax base is less than the receivable tax base reduction;
b) cohabitating partners where one partner is not the biological or adoptive parent may split the FTC, however the non-parent partner may only claim his/her share of the tax allowance retroactively as a tax reimbursement on his/her annual tax return. Additionally, the cohabitating partner is only eligible after birth (not during pregnancy) and there is only a financial benefit to splitting the tax allowance in rare cases because Hungary has a flat income tax rate, e.g. if one parent’s tax base is less than the receivable tax base reduction;
c) divorced partners who are both biological or adoptive parents of the child/ren who share custody may split the FTC evenly. In this case, both parents should communicate their decision to their respective HR offices;

d) single parents may not split the FTC.
** the medical certificate must by issued by the attending obstetrician/gynecologist and include the date on which the employee/spouse will reach the 91st day of pregnancy

Updated January 2018