Tax News - Social Tax

There is a significant change in case of individuals who are deemed to be foreign  based on the rules of Act CXXII of 2019 on Entitlements to Social Security Benefits and on Funding These Services, that income provided to them as non-wage benefits and specific defined benefits is no longer exempted from social tax liability.

Employees who are citizens of third countries may not be deemed as employees entering the labour market, and thus no social tax benefit may be applied due to their employment.

At the same time, the social tax benefit for employing persons with disabilities is extended to employees receiving disability support or personal allowance for blind people.

As of 1 July 2023 the majority of community investments and savings is charged with social tax, meaning that in addition to the 15% personal income tax 13% of social tax is also payable on them. Such income types are for example:

• interest received for deposits at credit institutions, and interests on deposits fixed after 30 June;
• interest, yield, income from redemption received with respect to publicly introduced and traded securities, in case it was purchased after 1 July 2023.

It should be noted that social tax liability on these income types is not capped. However, income of persons who are insured in another EU country or a third country is exempted from the social tax liability.