It is common for the amounts of family benefits to change every year in Hungary, and this year is no different. However, besides the amounts, this year the form and entitlement to family benefits is also changing, and let‘s face it, it is not always easy for employees and employers alike to navigate among the amendments. In this article we give a brief overview of what benefits and allowances parents are entitled to in 2019, and what compulsory or optional benefits possibly subject to preferential tax rates companies may offer to their employees with children.
Following the birth of their child, fathers are entitled to five days of paid leave, which they may take in one or in several parts until the end of the second month after the child is born. Any income and taxes related to this period of supplementary leave are reimbursed to the employer by the Hungarian State Treasury.
Supplementary leave for children
In Hungary, both parents have the right to claim extra paid leave based on the number of children they have, which amounts to two days for one child, four days for two children, and six days for three or more children. This supplementary leave may first be claimed by parents in the year the child is born, and for the last time in the year the child turns 16.
Family tax allowance
Individually or on a shared basis, parents can reduce their consolidated personal income tax base based on the number of children they have. This means the personal income tax base may be reduced by as much as HUF 66,670 (roughly EUR 210) per month with one child, by HUF 133,333 (roughly EUR 420) per child per month with two children, and by HUF 220,000 (roughly EUR 690) per child per month with three or more children. With regard to the amount of tax this translates to a reduction of HUF 10,000, HUF 20,000 and HUF 33,000 (roughly EUR 31, 63 and 104) per child. Parents can also claim the family tax allowance from the 91st day of the pregnancy.
If the personal income tax base is not enough to claim the entire family tax relief, parents may use this allowance for their healthcare contribution or pension contribution (family contribution allowance).
Here we need to mention the newlywed allowance too, which can be claimed by couples for 24 months after the wedding where this is the first marriage for at least one of the spouses. Individually, or together, the couple can claim a monthly total tax base allowance of HUF 33,000 (roughly EUR 105), which in practice reduces tax by HUF 5,000 (roughly EUR 16) – regardless whether the couple claims the family tax relief or not.
Crèche and nursery
Crèche and nursery services for employees’ children may be reimbursed as tax-free benefits based on an invoice, up to the amount of the cost incurred.
In previous years, back-to-school vouchers for primary or secondary school children were a popular element of the fringe benefit system. From 2019, however, this type of benefit is subject to the same tax rate as wages.
The Hungarian state provides a family allowance for parents from the birth of their child until the child finishes his or her education, but no later than the school year in which the child turns 20. It amounts to HUF 12,200 (roughly EUR 38) for one child, HUF 13,300 (roughly EUR 42) per child in the case of two children, and HUF 16,000 (roughly EUR 50) per child if there are three or more children. Parents raising children on their own – or if the child is terminally ill or seriously disabled – are eligible for a higher family allowance.
Women who attended prenatal care at least four times during their pregnancy are eligible for a state-granted maternity benefit amounting to HUF 64,125 (roughly EUR 200) in 2019.
Family benefits for childcare
Infant care benefit (csed) is provided for women who had social security for at least 365 days within the two years prior to their child’s birth. Infant care benefit is provided for the duration of maternity leave, i.e. for 168 calendar days.
Child care benefit (gyed) is provided until the child turns two, and is paid to women who had social security for at least 365 days within the two years prior to the child’s birth. In 2019 the ceiling for the child care benefit is set at HUF 208,600 (roughly EUR 656) per month. With child care benefit the mother is entitled to work regular hours after her child turns six months old.
Child care allowance (gyes) amounts to HUF 28,500 (ca. 90 EUR) per child per month in 2019. With the child care allowance, similarly to the child care benefit, the mother is entitled to work regular hours after the child turns six months old. Parents or grandparents are eligible to receive the child care allowance until the child turns three.
In 2019, parents and grandparents raising three or more children may claim child raising support (gyet) of HUF 28,500 (ca. 90 EUR) per month while the youngest child is aged between three and eight. With child raising support, however, the parent or grandparent can only work 30 hours a week, or work from home without any working-hour restrictions.
Other family benefits
The family benefits listed above, applicable in Hungary in 2019, are just the most general and typical cases. Naturally there are special cases and provisions not elaborated here, but our specialists are happy to give you more information for your company about any of the family benefits available in 2019.
If you want to learn more about what compulsory or optional forms of benefits you can offer to your employees with children, and possibly with preferential tax rates, do not hesitate to contact our payroll team!