In two or three weeks, the summer holidays will begin, with hundreds of thousands of students spending at least part of the time at work - partly for financial motivation and partly to gain work experience. It is now widely known that young people under 25 will pay no personal income tax from January this year, but their net income may vary significantly depending on their legal status. The main options are explored in the following analysis by Moore Hungary.
The new rules that entered into force this year Income tax exemption applies to both self-employment and non-employment income of young people, but less is known about the benefit is capped: it applies to a tax base of up to HUF 433 700 per month. Personal income tax is deducted by the payer from the top-up.
In terms of taxation employment through a school cooperative seems to be the most advantageous. Until the age of 25 the student pays neither personal income tax nor contributions. Moreover, the employer is not liable for social contribution tax. It is worth noting that, according to a government decree that came into force on 3 April 2022, the minimum hourly rate for services to be paid to a school cooperative is 1.178 times the hourly rate paid to the member. The hourly rate is at least the minimum wage per hour.
A student in employment does not pay VAT when the conditions for the reduction are met, but his/her income constitutes a contribution base, from which the employer deducts 18,5% in social security contributions.
If the student on the basis of an agency contract works, the contribution is calculated according to the rules applicable to self-employment income. This means that an expense can be charged against self-employment income, which can be itemised, based on invoices, or 10% without vouchers. A surcharge is only payable if the fee paid to the student is 30% of the minimum wage on the first day of the month in question, or 30th of that amount per calendar day, i.e. HUF 2000 per day.
In employment and on a contract basis the employer also incurs 13% social contribution tax obligation.
Instead of traditional legal relations, in addition to the student can also work in a simplified employment relationship for seasonal or casual work in agriculture and/or tourism, which also includes the film industry extra. Casual work is limited in time, up to a maximum of 5 consecutive calendar days in total, up to a maximum of 15 calendar days in total within 1 calendar month and up to a maximum of 90 calendar days in total within 1 calendar year.
It is important that for simplified employment, the student's net income, as he pays neither VAT nor contributions, since the employer pays the tax. The rate of tax payable by the employer for each calendar day of employment is HUF 500; 1000; or 4000, depending on the sectoral classification of the activity.
On the basis of an employment relationship established on the basis of simplified employment, as a basic salary or performance-related salary, in accordance with the conditions laid down, you may. at least 85 per cent of the statutory minimum wage, 87% for the guaranteed minimum wage. However, the net daily income of a film industry extra may not exceed HUF 18 000.
Employment of a foreign student
The benefit for young people under 25 years of age can be claimed from the wages or fees of a non-resident student if the same or has not received and does not receive a similar benefit for the same period in another state, and the value of the assets acquired in the tax year total income of - including income that is not taxable in Hungary - at least 75 per cent in Hungary is taxed. For non-resident taxpayers, the taxable base allowance is a separate additional declaration is required.
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