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Parliament approves law on severance pay tax

Parliament approved a law introducing a 98% tax on severance pay above HUF 3.5 million for ordinary public sector employees and over HUF 2 million for state and local council leaders and managers of state- or local council-owned companies.

Public sector workers who take early retirement will be exempt from the tax.

The law has retroactive effect back five years, however, heirs of people subject to the tax who have died will not have to pay it on their inheritance.

The bill submitted by Fidesz group leader János Lázár was approved by lawmakers with 304 ayes and 58 nays. The bill was modified from an earlier one approved by Parliament but annulled by the Constitutional Court. The changes were made after Lázár met with representatives of unions.

Parliament asked the President to sign the law with urgency. (MTI – Econews)