General rules for the tax refunds to parents
Tax & Legal Alert | PwC Hungary | 15 October 2021
As an additional measure against the negative consequences of the COVID-19 pandemic, the Hungarian government issued a decree on 30 September, based on which Hungarian employees who are raising children in 2021 are entitled to a refund of the personal income tax they have paid.
The tax refund is linked to the family tax allowance: the employee will receive the tax refund if he or she is eligible for family tax allowance in 2021 – even if the entitlement is only for one day in 2021. Both parents living with their children in Hungary are generally entitled to the tax allowance, thus both eligible parents will receive the tax refund. An expectant woman is also entitled to the tax refund assuming that at least 91 days of her pregnancy takes place in 2021.
Naturally, the tax refund may not be more than the tax obligation of the employee – taking into account all the tax deductions and allowances. Furthermore, the refund may not be more than the yearly tax burden of the average wage calculated on December 2020 – thus the refund is maxed at 809,000 Ft (EUR 2,260).
The refund is calculated based on the individual’s annual tax return. However, the tax authority will pay an advance by the 15th of February 2022, based on the information available mostly from the monthly tax payroll reports provided by employers.
If you have any questions about the above, please feel free to contact us.
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