This year, many significant tax changes enters into force. Therefore, we have now collected the most important ones that will affect businesses and employees in 2022.
Which will be the tax changes affecting personal imcome tax 2022?
How will the minimum wage and the guaranteed minimum wage amounts change?
The compulsory minimum wage (so called minimum wage) from 1 January, 2022.
• applying monthly wage: 200 000 HUF / month
- applying weekly wage: 45 980 HUF / week
• applying daily wage: 9 200 HUF / day
• applying hourly wage: 1 150 HUF / hour
From 1 January 2022, the guaranteed minimum wage for an employee employed in a full-time job requiring at least secondary education/qualifications:
- applying monthly wage: 260 000 HUF / month
- applying weekly wage: 59 780 HUF / week
• applying daily wage: 11 960 HUF / day
• applying hourly wage: 1 495 HUF / hour
In 2022, the minimum wage and the amount of the guaranteed wage minimum will also change.
What does the tax exemption for young people under the age of 25 mean?
This benefit is demandable from 1 January, 2022, as a discount reducing the consolidated tax base and can be applied by young people until they reach the age of 25.
Income to be taken into account: income earned in the month of entitlement (accounted for the month of entitlement, in the case of employment income), belonging to the consolidated tax base:
- income that qualifies as wages (e.g. income from employment, public employment, taxable social security benefits, jobseeker’s allowance, jobseeker’s benefit, etc.),
- the sum of non-wage income arising from other non-independent activities (exception is the amount of severance pay received in consideration of termination of employment, exceeding the statutory amount)
- income from self-employment:
- entrepreneurial withdrawals, flat-rate income,
- income of a primary producer from this agricultural activity,
- income of a Member of the European Parliament from this activitiy,
- income of the local government representative from this activity,
- income of the chosen auditor from this activity,
- income of a private individual from the activity carried out under an other contract for work for a fee, that he concluded not as a self-employed.
What tax change does this mean compared to the previous ones?
From the income on which the benefit is based, by tax year, the amount accounted by multiplying the number of eligibility months and the gross average earnings officially published by the HCSO may be exempted from the personal income tax payment obligation. By 2022, the average gross earnings at the relevant national economic level will be HUF 433,696, so in 2022, taking into account 12 eligibility months, HUF 5,204,352 (12 × 433,696) income may be exempted from the personal income tax payment obligation.
Where entitlement does not exist throughout the whole tax year, it shall be taken into account as part of the tax year’s income acquired under such title, proportional to the months of eligibility.
Considering that the benefit for mothers with four or more children precedes all other benefits, and that the first-spouse’s allowance and the family allowance can be applied and shared jointly with the spouse/parent, therefore, the order of application of the tax benefit for young people under the age of 25 is as follows:
• Benefit for mothers with four or more children,
• Benefit for young people under 25,
• personal allowance,
• first-spouse’s allowance,
• family allowance.
Tax changes in flat-rate taxation
In the case of flat-rate taxation of sole proprietorships, the change of threshold entitling for choice:
• Ten times the amount of the annual minimum wage (HUF 24,000,000) instead of HUF 15 million,
- in the case of sole proprietors engaged in retail activities, fifty times the annual minimum wage (HUF 120,000,000) instead of HUF 100 million.
Change in flat-rate cost rate:
The number of flat-rate cost rates applicable to the determination of income shall be reduced to three:
– taxpayers, who previously used 25% and 40% cost ratios respectively, can determine their income by deducting a 40% cost ratio,
– taxpayers (e.g. taxi drivers, hairdressing saloons), who previously used 75% and 80% cost ratios respectively, can determine their income by deducting a 80% cost ratio,
– those using cost ratios of 83, 87, 91 and 93 percent can determine their income uniformly by deducting a 90 percent cost ratio.
Tax-free part of income, withholding tax payment liability:
Income is exempt from personal income tax up to half of the annual minimum wage (HUF 1,200,000) and there is no obligation to pay withholding tax. If the withholding tax base exceeds half of the annual minimum wage (HUF 1,200,000), the withholding tax shall be paid only on the withholding tax base exceeding half of the annual minimum wage.
Tax exemption for bicycle use
The private use of bicycles provided by the paying agent (employer), exclusively powered by human power or assisted by an electric motor with a power of up to 300 W is exempt from tax. Taxable income does not need to be established even if the bicycle can be used by the individual for his own personal purposes. The ownership of the bicycle is not tax-free. Bicycles should be understood only as bicycles in the common sense. However, the tax exemption shall not apply, for example, to the allowance of a scooter, an electric scooter or other two-wheeled device for transport.
Provision of bicycles to private individuals:
Annex 1 of the Act on Personal Income Tax disposes on the tax exemption of the private use of bicycles provided by the employer. The costs and expenses incurred through the transfer, use, maintenance and operation of bicycles provided by the employer to employees and other individuals associated with the company are always deductible in the corporate tax base.
This includes bicycles owned, hired or leased by the company, or available to the company in any construction, furthermore bicycles owned free of charge by any legal solution to private individuals at the expense of corporate expenses, which the individual concerned may use exclusively for private purposes or for private purposes in addition to the business, without reimbursement.
The provision applies to the conventional bicycles driven by human power and bicycles assisted by an electric motor with a maximum power of 300 W, pedal-driven and two-wheeled.
This does not include, for example, an all-electric bicycle, a scooter, a segway.
The purchase of bicycles used by employees and the costs in connection with the use and operation of company bicycle fleets can be accounted for in the corporate tax base. It is irrelevant whether workers use bicycles for work-related purposes or for private purposes.
Social contribution tax
The social contribution tax rate will be 13% from 1 January 2022 and the vocational training contribution will be abolished. This tax change means that the employer’s tax burden on the employee’s remuneration will be reduced from 17 percent to 13 percent.
Vocational training contribution
There will also be a tax change. From 1 January 2022, the vocational training contribution will cease to exist. From 1 February 2022 the income paid to the NAV for the type of vocational training contribution tax shall be recorded as a social contribution tax, and the outstanding claims and obligations shall be settled against the social contribution tax.
Tax change in 2022 will affect both employers and employees
Amendments to the Corporate Tax Act:
Development tax benefit rate
In the case of investments by small and medium-sized enterprises, the threshold entitling to tax relief is changed again. The development tax allowance is unknown to many SMEs, as until now this corporate tax allowance could only be used for investments of hundreds of millions of HUF. However, as of 1 January 2022, development tax relief can also be applied to investments of at least HUF 50 million at present value for small businesses and at least HUF 100 million for medium-sized enterprises at present value. It is important that it is not a tax base discount, but a tax benefit that can be enforced from the tax payable. From 01.01.2022, the threshold for tax relief is HUF 50 million for small businesses and HUF 100 million for medium-sized enterprises.
What will happen to KATA taxation?
There will also be a tax change in the supply fund of low-taxing entrepreneurs
The full-time KATA individual and social entrepreneurs can decide whether to pay HUF 50,000 per month according to the rules of the Act of Katv. or to take advantage of the option of paying HUF 75,000 instead of HUF 50,000. The amount paid is important in the calculation of the period of service that can be taken into account in the benefit fund and pension.
Under the bill, the supply funds are as follows:
- Itemized tax: HUF 50.000, Supply fund: HUF 102.000
- Itemized tax: HUF 75.000, Supply found: HUF 170.000
- Itemized tax: HUF 50 000, Supply fund: HUF 108 000
- Itemized tax: HUF 75.000, Supply fund: HUF 179 000
Tax change in the case of KIVA as well!
From 1 January 2022, the small business tax rate will be reduced from 11 percent to 10 percent. The vocational training contribution, which was also previously induced by the tax, will cease to exist from 1 January 2022, i.e. neither small business taxpayers nor other enterprises will be obliged to pay this burden in the future.
The basis of the tax is the amount of personal payments plus the balance of capital and dividend operations, modified with some additional items.
The advantage of this tax type is that it charges the profits and wage weight generated in the enterprise at the same rate, thereby encouraging better employment and raising wages.
In addition, the method of determining the tax base allows the profit spent on increasing the assets of the enterprise, such as investments and the purchase of stocks, not to increase the tax base, thus favours the fast-growing enterprises and significantly simpler than corporation tax.