With the end of the school year, many families not only begin the summer holiday period, but may also face changes affecting their family benefits and social security entitlements in Hungary. This is particularly important in cases where a child completes secondary school studies and their student status is terminated or continues in another form.
Does the end of secondary school mean the end of the tax allowance?
The entitlement to the family tax allowance available to parents for a graduating child generally ends at the conclusion of the school year. Therefore, both parents and employers should be aware of the eligibility conditions and the necessary administrative obligations.
This entitlement is often taken for granted during the year. However, in certain situations, a lack of attention may result in disadvantages. In this article, we summarise the most important information.
Pursuant to Sections 29/A (1)-(6) of Act CXVII of 1995 on Personal Income Tax in Hungary, the family tax allowance (including the family contribution allowance) is generally available to a parent for as long as they are entitled to family allowance (educational and/or schooling support) in respect of their child.
How long are parents entitled to family allowance and schooling support?
Under Section 8 of Act LXXXIV of 1998 on the Support of Families in Hungary, parents are entitled to schooling support provided as part of the family allowance after the end of compulsory schooling, as long as the child continues studies in a public education or vocational training institution. Entitlement continues until the last day of the school year in which the child reaches the age of 20, or 23 in the case of a student with special educational needs who is not eligible for disability benefits under the Hungarian Act on the Rights of Persons with Disabilities and the Promotion of Their Equal Opportunities.
Based on the above, entitlement to family allowance ends after the month in which the child obtains a secondary school leaving certificate (matura) or acquires a vocational qualification in full-time public education.
When does the family tax allowance for a graduating child end?
Since entitlement to the family tax allowance is linked to family allowance, the family tax allowance can no longer be claimed once entitlement to family allowance ceases.
It is important to note that the last day of teaching is not the same as the last day of the school year, and this date may vary by institution. It is therefore advisable to inquire with the relevant school:
- If the last day of the school year falls on 1 July, entitlement to family allowance and the family tax allowance remains in place for July.
- If the school year ends on 30 June, the benefit is no longer available for the following month.
What action must parents take?
Educational institutions report the completion of secondary school studies to the Family Support and Social Security Department of the Hungarian Government Office, therefore parents receive an official decision regarding the termination of family allowance entitlement.
If a parent has claimed the family tax allowance for a graduating child, he / she has to report the termination of eligibility to his / her employer. The amended advance tax declaration must include the previous data and indicate that the affected child should no longer be taken into account either as dependent child eligible for the allowance or simply as dependant when applying the family tax allowance.
IMPORTANT! If the declaration relating to the family tax allowance is not amended and the parent claims the credit without being eligible, tax arrears will accrue. If the result is a payment obligation exceeding HUF 10,000 in the tax return, 12% of the payment liability will have to be paid as a penalty together with the tax arrears.
Continuing studies at a public education or vocational training institution
If the graduating child resumes studies in September in a full-time public education institution or vocational training institution under a student relationship, the parent becomes entitled again to family allowance and the family tax allowance. The entitlement remains in place until the end of the school year in which the child reaches the age of 20, or 23 in the case of a student with special educational needs.
Importantly, neither family allowance nor the family tax allowance is automatically reinstated in this case; a new application must be submitted for the child concerned.
Application process:
- Family allowance can be claimed from the Hungarian Government Office. If the application is submitted in September, the amount is granted retroactively for July and August as well.
- The family tax allowance can be requested again through the employer. However, for July and August it can only be claimed retroactively on an individual basis during the 2027 personal income tax settlement.
Continuing studies in full-time higher education
If the child continues their studies in a full-time higher education institution, parents are not entitled to family allowance in respect of that child. However, if the parent registers the child as a dependant with the Hungarian Government Office, the family will not be entitled to family allowance for that child, but may receive a higher amount of family allowance for the other dependants, i.e. the other children being raised in the family.
In this case, the child studying in higher education may also be taken into account again for the purposes of the family tax allowance, but only when determining the number of dependants. The declaration relating to the family tax allowance must therefore be amended accordingly.
Overall, the family tax allowance for a graduating child depends on the status of the student relationship and the entitlement to family allowance. Therefore, it is important for both parents and employers in Hungary to monitor the date on which eligibility ends and/or resumes.
The application of rules relating to the family tax allowance and other family support benefits for individual employees, as well as the continuous changes to those rules in Hungary, may impose a significant administrative burden on HR and payroll departments. Our experts provide support in ensuring payroll, social security and employment processes remain compliant with legal requirements. Contact us to learn more about our payroll services.
This article provides general information and does not constitute advice.
