Changes to the dividend tax in Hungary 2019
Company owners are allowed to take dividend from the profit of the company. From 2019 January, regulations on dividend tax change: instead of the health contribution, a social contribution tax is to be paid to the tax authority.
Personal income tax
As a rule of thumb, you have to pay a personal income tax after every income you as an individual acquire. The personal income tax in Hungary is currently 15%, as has been for some years. That does not change in 2019.
Social contribution tax instead of health contribution
Previously, a health contribution of 14% was also to be paid after dividends you take from your company, with a maximum of HUF 450,000 (ca. EUR 1,400) / year. From 2019 January, you do not pay a health contribution. Instead, you pay a social contribution tax of 19.5%, maximized in HUF 697,320 (ca. EUR 2,150)/year in 2019.
UPDATE: social contribution is 17.5% as of 1 July, 2019, maximized in HUF 625,800 (EUR 1,955)/year.
While this seems a raise in taxes to pay, it might actually decrease them. You might be paying social contribution tax after other types of income as well (e.g. if you also take a salary from your Hungarian company), and the social contribution tax you have to pay per year is calculated cumulatively. As a result, the social contribution tax you pay after other income decreases the maximum social contribution tax you pay after the dividend you take from your Hungarian company.
Seems complicated? Consult your accountant!
If you want to take dividend from your Hungarian company, always consult your accountant. Make sure you understand how much dividend tax you have to pay in total, and pay it in accordance with regulations. If you are a tax resident of another country as well as Hungary, other regulations might also apply. In that case, ask for the help of a tax consultant. Your accountant can arrange the tax consultancy for you.
Click here to learn all the basic facts about taking dividend in Hungary
Click here to learn how to calculate taxes on dividend in Hungary.
Click here to see how your tax residency affects taking dividend from your Hungarian company, or here to learn in detail about tax residency.
Last updated: 26 July, 2019.
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