Hungary's 1% + 1% scheme explained

This means you can support causes you care about without it costing you extra, as the money comes from your already paid taxes.

How Does It Work?

You can allocate your 1% by filling out a declaration form, either electronically through the e-SZJA platform or by mail, by May 20 of the following year. The Hungarian Tax Authority (NAV) then transfers the funds to the chosen organizations by September 30. It’s simple and doesn’t affect your income.

Historical Context and Legislation

The scheme was introduced in 1996 through the "Act on the Allocation of a Portion of Personal Income Tax at the Disposal of the Taxpayer" (1996. évi CXXVI. törvény), aiming to empower taxpayers to influence how part of their tax contributions are used. The legislation enabled individuals to allocate 1% of their income tax to non-profits and an additional 1% to churches, with the Hungarian National Talent Program later added as an alternative for the second 1%. This initiative has been in place for nearly three decades, with key milestones including increased participation in the 2000s and refinements in the 2010s to enhance accessibility and eligibility.

Historical data, such as the 2008 figures from the Wikipedia page on "Állampolgári adófelajánlás" (Hungarian Wikipedia - Citizen Tax Allocation), indicate that out of a potential 30.1 billion HUF, 16.5 billion HUF was allocated, showcasing early adoption. The scheme’s growth reflects both rising tax revenues and increased public awareness, as evidenced by recent statistics.

Mechanics of the Scheme: Step-by-Step for Taxpayers

The process for allocating the 1%+1% is designed to be user-friendly, accommodating both electronic and traditional methods. Taxpayers begin by identifying eligible beneficiaries, with NAV publishing annual lists of over 30,000 non-profits and religious organizations. For instance, the 2025 list is available at NAV - Civil Beneficiaries 2025, and religious beneficiaries at NAV - Religious Beneficiaries.

The allocation is made through the following steps:

1. Identify Beneficiaries: Choose a non-profit using their tax number for the first 1%, and a church or the National Talent Program using a technical number for the second 1%.

2. Submit Declaration: Use the e-SZJA platform for electronic submission, which automatically verifies eligibility, or fill out the EGYSZA form and mail it in a sealed envelope to the local NAV office. Detailed guidance is available at Adó 1% - Submission Info.

3. NAV Processing: NAV collects declarations and transfers funds by September 30, with results published by September 15, as seen in the 2023 statistics at Adó 1% - 2023 Results.

Taxpayers can optionally share contact details for acknowledgment, and the deadline for 2024 taxes is May 20, 2025, aligning with current regulations.

Impact on Non-Profits and Churches

The scheme has had a profound impact on Hungary’s non-profit sector and religious institutions, providing a stable funding stream. Non-profits like Central European University (CEU - 1% Law), Greenpeace Hungary (Greenpeace Hungary - 1% Donation), and the Hungarian Helsinki Committee (Hungarian Helsinki Committee - 1% Support) rely on these donations for operational and project funding. Smaller organizations benefit from direct public support, reducing reliance on government grants.

Churches, such as the Roman Catholic Church and Reformed Church, receive significant portions of the second 1%, supporting community and educational programs. The Hungarian National Talent Program, an alternative for the second 1%, focuses on educational initiatives, enhancing talent development. This dual allocation fosters a culture of giving, with organizations becoming more transparent to maintain public trust, as noted in various informational pages.

Criticisms and Controversies

While widely praised, the scheme faces several criticisms:

• Distribution Concerns: Larger, well-established organizations often receive more donations due to visibility, leaving smaller entities at a disadvantage, as noted in discussions at Adó 1% - Info Page. There’s a perception that some funds are used for administrative costs rather than direct impact.

• Administrative Burden: Smaller organizations may struggle with reporting requirements, potentially limiting participation, as highlighted in nonprofit guidance at Nonprofit Hungary - 1% Guide.

• Public Awareness: Despite growth, over 50% of eligible taxpayers do not participate, possibly due to lack of awareness, as mentioned at Magyar Közösségek - 1% Awareness.

• Political Influence: There are occasional concerns about political interference in eligibility, particularly for non-profits critical of the government, though specific instances are not detailed in the sources.

These issues suggest areas for potential reform to ensure equitable distribution and broader participation.

Conclusion

Hungary’s 1%+1% scheme is a pioneering model of tax allocation, empowering taxpayers to support non-profits and churches while fostering civic engagement. Since 1996, it has grown significantly, with over 1.8 million donors in 2023 contributing over 15 billion HUF. While it faces challenges like distribution inequities and awareness gaps, it remains a vital part of Hungary’s social fabric, reflecting the power of individual choice in shaping public good. As of April 13, 2025, the scheme continues to evolve, with ongoing discussions about enhancing its impact and inclusivity.