From 2017, the rules of cafeteria in Hungary had been significantly changed again. All companies who would like to provide opportunity to their employees to freely choose their benefits now have to review their policies in the following months/weeks to transfer these current legal changes.
The most important change is the substantial decrease in the range of employee fringe benefits.
The previously implemented benefits (Erzsébet-voucher, school support and pension fund contribution) are being excluded from the range of discount taxes. In the future these can be only given to employees as certain specified benefits. It is true that the tax burden of these benefits had been significantly reduced (altogether, 43 percent tax has to be paid after them) but it is still nearly 10 percent higher than the burden of fringe benefits.
Within the scope of fringe benefits, payments to SZÉP card has been remained in all categories (catering, accommodation, recreation) with the same maximum amount as before.
An odd benefit form has entered the scope of preferential taxation, the cash with the maximum amount of HUF 100.000. In practice this means that those employees who choose this type of benefit can get their transfer of money taxed as fringe benefits and not as wages, therefore the total charge for the company is only 1.3 times of the net payment.
Furthermore the law does not regulate when employers should transfer this for their employees. It can be done in the beginning of the year in one installment, but it has to be considered if the employee’s employment relationship ceases during the year, because the company can only account the prorated portion for the year. The part exceeding the pro rata basis is taxed as the contractual relationship; therefore if the employers were in employment relationship at a company, the extra amount should be accounted as their salary. In this case self reporting is not needed by the company, is it enough to account the difference in the reference monthly declaration and to pay the essential tax after it.
The law retained the so-called recreational framework, which controlling the fringe benefits to not to exceed the yearly HUF 450.000. If the benefits provided by the employer exceeding this framework, than the exceeding amount will fall under a much higher tax rate, and the tax burden will increase with 10 percent.
The cafeteria policy publication and follow-up of the legal changes for companies are very important because it not only can spare tax with these benefits, but a good cafeteria policy can be an excellent way for the company to increase the employee satisfaction and to boost their commitment for the company.
If you need more information about the cafeteria policy or would like us to assist you with setting up the best cafeteria policy, please contact us. Our experts are ready to assist you.