Under the Act on Personal Income Tax, the overall tax base and the tax payable on it can be reduced on the basis of certain tax breaks. One of these tax breaks is the disability allowance.
Certain conditions must be met before a person can claim the disability allowance. For example, the taxpayer who wants to take advantage of the allowance must make a declaration pertaining to the relevant tax year and must be in possession of a duly issued medical certificate that supports the declaration or a resolution on the taxpayer’s eligibility for disability benefit. It is important that the certificate can only be used for as long as it is valid, but if the medical certificate confirms that the disability in question is permanent, the taxpayer will be able to claim the allowance in each year if he or she makes the declaration.
The allowance is only available for persons with eligible disabilities, i.e. relatives of people with disabilities cannot take advantage of it, even if the disabled relative does not have income that would be eligible for the allowance. In other words, a parent may not use the allowance in connection with a disabled child.
The tax payable on the overall tax base may be reduced on a monthly basis by 5% of the statutory monthly minimum wage as in effect on the first day of the tax year, from the month in which the disability starts. Currently, the reduction is HUF 7,450 per month.
Employees can give two copies of the relevant declaration to their employer during the tax year or can opt not to submit a declaration and claim the allowance when they file their annual tax return instead. The declaration does not have to be attached to the tax return but must be retained for five years in case there is a tax audit.
If there is any change in the information stated in the declaration, a new declaration must be made. If a taxpayer uses the allowance without being eligible for it and this represents a tax shortfall of more than HUF 10,000 according to the tax return, 12% of the shortfall will have to be paid as a penalty.
If the allowance is not claimed in a tax year, the eligible taxpayer can claim it retroactively for up to five years in a self-revision procedure, provided that he or she is in possession of the required medical certificate.
The rules of how an existing disability or medical condition should be certified are described in a Ministry decree. A duly issued medical certificate must state the eligible disabled person’s natural identification data, place of residence and tax identification number; the date when the medical documents serving as the basis for the certificate were issued; a statement whether the relevant disability or medical condition is temporary or permanent; the validity of the certificate if it is temporary certificate; the date when the certificate is issued; and the signature of the physician who issues the certificate.
The tax allowance can only be claimed on the basis of the disabilities and medical conditions specified in Government Decree No. 335/2009.
The most frequent disabilities and medical conditions include gluten and lactose intolerance, hearing or visual impairment, physical disabilities, certain vascular diseases and autoimmune diseases that cause serious organ damage. Starting from 1 January 2019, new diseases and groups of diseases have been added to the eligibility list, which now therefore includes breast, cervical, ovarian, prostate and testicular cancer, as well as endometriosis.
Sources: Government Decree No. 335/2009
Ministry of Healthcare Decree No. 49/2009