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The most important certificates and declarations in connection with the annual personal income tax return

15 December 2014

One of the most important basic documents of the obligation to submit the annual tax return is the ’14M30’ document, named „Summary certificate of the employer, payer for submitting the personal income tax return or tax declaration of year 2014”, that contains the taxable income received from the given employer or payer in the tax year. The employer shall issue and hand over the certificate to the employees until the 31st of January in the year following the tax year at the latest. The document shall not be forwarded to employees who terminated their employment relationship during the tax year.

If the employee handed over document „Tax Form 2014” to the new employer, ’M30’ certificate shall contain income received from previous employers in the case of employees, who established their employment relationship with the given employer during the tax year and have already had income from other employers in the tax year as well. The new employer shall include the amounts from the previous employer’s tax from as „cumulative” data in the ’M30’ certificate and marks on the certificate whether it contains income from former employers as well. If the certificate does not contain any income from previous employers, the employee shall pay attention to include the income, received from previous employers, in the annual tax return based on the certificates from the previous employers.

 

What other taxable income may the employee acquire during the tax year?

 

When preparing the annual tax return, the employee shall take the income into account, which he received during the tax year however the ’M30’ certificate does not include them.

If the given labour relationship ends during the tax year, the payer shall issue and hand over document ’Tax Form 2014’ to the employee at the date of termination. If the employment relationship does not end during the year, ’M30’ certificate, which contains the annual data as cumulative amounts, shall be issued. It happens quite often that the individual carries out activities under a service contract for another payer, with the employment relationship at the same time. In this case rules above shall apply as follows; if the service contract ends during the tax year, payer shall issue and hand over document ’Tax Form 2014’ to the individual, if the service contract does not end during the tax year, ’M30’ certificate shall be issued on the paid income.

If the employee received any taxable social security payment during the tax year (maternity allowance, child-care benefit, sick-pay, child-care allowance, benefits for accident-related injuries), which payments are not paid by a social security payment office and the paid amounts are not included in ’M30’ certificate, the employee shall expect to receive a certificate from the National Health Insurance Fund. The certificate shall include the duration, in which the employee has been entitled to the payment. As a result of it, if the employee becomes incapable of work more than once during the tax year, he can easily make sure whether all certificates were issued and handed over to him.

It may also happen that the employee receives income from other than a payer (for instance: renting property to a private individual). In this case, in the absence of a payer, the employee shall determine and pay the personal income tax advance on the received income quarterly, until the 12th of the month following the quarter. Since there is no payer, which would determine, deduct and pay the personal income tax advance, there is no certificate to be issued. However income from renting property also shall be included in the personal income tax return.

If the employee is hired under a simplified employment contract, personal income tax advance shall not be paid after the income from this type of employment relationship. The employee shall pay personal income tax only if the annual income from the simplified employment relationship exceeds the tax free amount. In the case of temporary work, the tax free amount shall not exceed the multiplication of the number of days spent under temporary work and the amount of the daily minimal wage (4 670 HUF/day in 2014). The income, which exceeds the tax free part, shall be included in the annual tax return and personal income tax shall be paid on this amount. The employer shall issue a certificate on the paid amount at the date of termination or at the end of the year.

Declaration on the family tax base allowance and family contribution benefit

In the case of employer’s tax assessment, family tax base allowance shall be validated based on the declaration of the individual or individuals. For determining the amount of the annual tax liability, the individual shall declare how he intends to validate the amount of the family tax base allowance. This rule shall apply even if the employee declared at the beginning or during the tax year for the determination of the personal income tax advance, since the two declarations shall not be the same.

If there is more than one recipient, the family tax base allowance due for a given month of eligibility may be claimed jointly by the recipients. The recipient shall be able to share the family tax base allowance to which he is entitled with his spouse (including, in particular, the spouse of the foster parent) or domestic partner living in the same household, who is not otherwise entitled. However this is not possible at the personal income tax advance assessment during the tax year, but at the annual personal income tax assessment.

It is highly recommended to take into account, that if the individual declared to validate the family contribution benefit, he is not entitled to modify this decision at a later date. If the private individuals eligible for family tax base allowance, or another private individual who is also entitled to claim the allowance, claimed the family contribution benefit in the personal income tax advance, the amount of the family tax base allowance that may be claimed together by the recipient(s), or by the spouse or domestic partner with whom the allowance is shared shall be decreased by the portion of the family contribution benefit they claimed together allocated by the same rate as the personal income tax (16 per cent) in the annual tax return.

If the individual requested the validation of either the family tax base allowance or the family contribution benefit without eligibility, in connection with determining the personal income tax advance, it shall be indicated in the private individual’s tax return filed for the tax year in question and shall be paid as an over/under-payment penalty of 12 per cent of the difference in payments. This provision shall not apply if the payment difference is below 10 000 forints.

 Certificates in the case of membership in any voluntary mutual insurance fund

The amounts, which may be used, are paid to the private individual’s account tax free or with tax allowance. As a result of it, the availability of services, which may be requested, is regulated by a government decree.

If the individual requests any service during the tax year without eligibility, the member of the voluntary mutual insurance fund shall be obliged to pay personal income tax advance and health insurance contribution as well. If the individual pays the amount of the service used without eligibility or acquires the certificates until the deadline given in the notification, the private individual shall not be subject to tax liability. If the repayment is not paid or the certificates are not acquired within the given deadline, the voluntary mutual insurance fund shall issue a certificate of the amount of the services used without eligibility quarterly or at the end of the tax year to the private individual. The voluntary mutual insurance fund shall issue a certificate of the amounts paid to the fund. Based on this certificate the private individual has the chance to request tax allowance when submitting the annual tax return.