From 1 January 2025, third-country nationals will no longer be entitled to claim certain personal income tax (PIT) benefits. Third countries are non-EEA countries and countries that have not concluded a bilateral social security agreement with Hungary.
The family tax allowance rule (tax base allowance per month, depending on the number of dependants) applies to individuals who are entitled to family allowances, invalidity benefits or similar benefits under the legislation of an EEA State or a non-EEA State bordering Hungary (Ukraine or Serbia).
From this year, the first spouses' allowance is no longer available to third-country nationals, but only to citizens of EEA countries and non-EEA countries bordering Hungary. The same applies to the benefit for young people under 25.
Further PIT benefits are not affected by the change: third-country nationals can also apply for the personal allowance for severely disabled individuals as well as the maternity allowance (note that eligibility can be established on detailed knowledge of personal background).
If the foreign individual is a tax resident in Hungary and comes from an EEA member state, Ukraine or Serbia, he/she can claim the same tax benefits as a Hungarian citizen. A non-resident individual may also claim tax benefits if his/her income taxable in Hungary reaches 75% of his/her total income for the tax year, provided that he/she is not entitled to the corresponding benefit in the country of residence and meets the special provisions of the Personal Income Tax Act.
By Gabriella Galik, Founding Partner, KCG Partners Law Firm
