On August 1, the cafeteria calculation rules have been significantly changed again, in relation with the housing benefit supports. From now on, employers can support house purchase, lease, building, expansion, modernization, and accessibility as well as the loan repayments of their employees as a tax free allowance, as these regulations now falls under the power of personal income tax, while a newly released sublet support has appeared too. In our current newsletter, we are going to go through the related changes and amendments about this topic.
According to the current legislation in force, currently 30% of the property value (maximized to HUF 5.000.000) can be given as a tax free housing benefit. The law amending, rule tightening and definition clarifying was needed because the government believed that it is very important to only use this support for where it is necessary as this amount is considered as a significant amount.
What should be revised in case of tax exemption request:
- the size of the apartment;
- the number of residents;
- the employee’s the legal status in the property (beneficiary or owner);
- does the employee, who is applying for the support, effectively living in the property.
If the employee is entitled to the support, the employer can grant it as a lump-sum payment or whether grant it as a loan repayment contribution through a credit institution. Also it is the employer’s duty to check if the grant payment is used properly according to the legislations for the right purpose.
1. The new law defines the concept of accessibility and modernization more accurately:
- Accessibility: Completion of technical work, to ensure the intended use for people with functional disabilities and to reduce the difficulties of everyday home use for them.
- Modernization: For the purpose of increasing the comfort level of the property with installation/deployment of water-, canal-, electrical-, gas system; bathroom establishment, if it cannot be found in the apartment; establishment/replacement of the hot water providing system; building insulation, including thermal-, sound-, water insulation, doors and windows, roof replacement and insulation.
2. The determination of the reasonable apartment size has changed:
- The tax free housing loan support is only possible, if the number of rooms in proportionate with the number of residents, does not exceeds the statutory limit. From August 1, the method of determining the maximum number of rooms and proportionately the number of people living there has been changed.
- With the application of the new calculation method, in case of 1 or 2 person, the number of rooms in the property cannot exceed 3 rooms, while in case of 3 or 4 person, it cannot exceed 4 rooms. Further, the maximum number of rooms is increasing by 1 room with every new resident in the apartment.
3. The definition of ’half-room’ has disappeared
- While until now, in case of the consideration of the tax free employer support the law counted the 6-12 m2 rooms as ‘half-rooms’, this definition has disappeared on August 1 and from now on rooms under 8 m2 does not count as a room and don’t have to be considered as a room at all, but if the size of the floor space exceeds this number, it has to be considered as a ‘normal room’.
4. Determination of the residents
- The other key factor at the determination of equity is the number of residents. From August 1, we can consider the employees close relatives (except siblings) and the partners of the employees, and their close relatives (except siblings) as residents in the property.
Deadline for the tax exemption request
The residential employer support shall be eligible tax free, if the employer has every necessary certificate, declaration and document from the employee until May 31 of the following year after the payments and in case of building, expansion, modernization and accessibility until May 31 of the year following the year of payment. In the absence of these documents or if the usage of support is not happening in accordance with the conditions, in that case the support counts as the employee’s ‘remuneration of work’ with 20% increased amount (i.e. the 120% of the supports amount).
As a new benefit, the sublet support has been released, which means that in the future, employers can provide tax free housing allowance for those employees whose permanent place of residence is farther from the workplace than at least 60 kilometer or whose daily commute to work is at least 3 hours and who is employed for at least a weekly 36 hour work schedule. The subsidy rate could reach even the 40% of the minimum wage in the first year of the employment, the 25% of the minimum wage in the following two years and the 15% in the last year.
If you have any further questions about these housing benefits, or about their detailed conditions, feel free to contact us, we would be pleased to help you.