New tax exemption for certain wine products in Hungary as benefits | NewsFlash

Pursuant to Government Decree 451/2023 (X.4.), from 16 November this year, there is a new tax exemption for certain wine products in Hungary, for bottled wine or wine products as benefit with a protected designation of origin or protected geographical indication purchased directly from a winery, if it is:

• in the context of representative and non-representative catering,
• a business gift,
• a gift of negligible value.

Winery benefits for Christmas

With the Christmas period approaching, it may be good news for many businesses that, if the above conditions are met, wine products can be given tax-free as a gift of negligible value or as gifts to business partners, as well as at certain company events as a derogation from the previous rules. In such cases, neither personal income tax nor social contribution tax will be payable on the benefit.

When is there no tax exemption for certain wine products in Hungary?

However, it is important to note that the gift is not tax exempt if the product is purchased from a trader (e.g., wine merchants, chain or individual stores), as the tax exemption is conditional on the product being purchased directly from the winery. In addition, in case of wine, it must be bottled and must have a protected designation of origin or geographical indication.

The new rule specifies the cases in which the supply of a wine product is exempt from tax, which are defined by law as certain specific benefits. The definition and content of these benefits, including the limits, remain unchanged and still include the exempted wine products and their value.

Low value gifts

Thus, a gift of a small or negligible value may continue to be granted only once a year as a specific benefit, up to a value of 10% of the minimum wage (currently HUF 23.200), with the value of the wine product now being exempt from tax.

As mentioned above, in addition to catering of representational and non-representational purposes (e.g. business, festive dinners, events) no tax liability arises in respect of wine-sector products which comply with the rules of the above-mentioned Government Decree when

• those are provided as a gift of negligible value by the employer to an employee at the end of the year (only if no such gift has been previously accounted for in respect of that individual in the tax year), and
• those are given by companies to their business partners as business gifts.

Wine products provided before 16 November, which otherwise would meet the conditions, cannot yet be treated as subject to this tax exemption, and it should be highlighted that the new rule is an transitional provision, so its applicability will be adapted to the duration of the emergency period and will only remain applicable afterwards if the relevant provisions are incorporated into the Act on Personal Income Tax.

Ildikó Hajnal-Balázs

Tax Manager | Accace Hungary

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