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Do I get a refund on my taxes intended to cover pension payments upon leaving Hungary?

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Do I get a refund on my taxes intended to cover pension payments upon leaving Hungary?

If you work in Hungary, your taxes include the social security tax, which is intended to cover pension payments. If you leave Hungary before you reach retirement age, you do not get a refund on these taxes. However, you will be compensated depending on where you retire.

State pension in Hungary

Retirement age in Hungary is 65 years, after at least 20 years spent working. This is the rule of thumb, but the age can be lowered or the working time can be shortened in some cases, e.g. for women, while time spent as self-employed, on sick-leave, on maternity leave, or on unemployment allowance also counts.

State pension is financed by the social security tax, which is currently 18.5% of your gross salary. State pensions are financed by those who are paying the tax currently. If you are working in Hungary, the pension payments of those in retirement are financed by your taxes. As a result, you cannot get a refund on this tax the same way as on VAT, since it is already spent.

In any case, you can check your payments made to the pension fund at the website of the Hungarian Treasury here. Click the “Kivonat megtekintése” (“See overview”) option at the top of the left sidebar, then use your Ügyfélkapu access to log in, and enter your TAJ number to see your data.

Not planning to retire in Hungary?

If you are only planning to stay in Hungary for a few years, after which you want to move on, either to another country or back to your country of origin, most probably you will not be paid a pension directly by Hungary. However, it is a reasonable expectation for your taxes intended for financing your retirement to find their way back to you.

Wherever you intend to retire, it is best practice to start gathering information at least half a year before you reach retirement age in the country where you live, and have a list of all the countries where you worked throughout your active years, complete with the working periods and supporting documents.

You should keep in mind that countries may differ on:

  • retirement age,
  • time required for eligibility for pension payments (this is not the same time required for local pension payments, which is at least 20 years in Hungary; you may become eligible already after 1 year spent working in a country, but this varies by country),
  • the way pension is calculated.

These differences will influence how much money to expect from what age, combined with where you intend to finish your career and where you intend to retire (these two may or may not be the same).

If you have worked in various EU countries and you are planning to retire in the EU, the member states will sort out pension payments among themselves. In some countries you receive relevant paperwork when you reach retirement age, and in others you must apply on your own.

If you are planning to retire in a third country after having worked in Hungary, you are most probably still covered. Check if your country of planned retirement has a retirement related agreement with Hungary or any other country where you worked. It is best if you ask the local authority handling state pensions about your options.

Receiving state pension after a life of travel

If you live and work in Hungary or any other EU member state, you become eligible for pension payments from the state once you reach retirement age. The sum will depend on how much taxes you paid where. EU regulations are pretty straightforward about how this works, even if the procedure is complex. If you are retiring outside the EU, check your options with the local authorities, and make sure you go prepared with the relevant information and supporting documents.

Helpers Hungary provides administrative assistance to foreigners living, working, and doing business in Hungary. We focus on supporting businesses with company setup and residency applications for the CEO and the employees while we also do our best to make life easier for expats in Hungary by providing information about relevant administrative procedures.

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The post Do I get a refund on my taxes intended to cover pension payments upon leaving Hungary? appeared first on HELPERS.

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