Taxable allowances where the tax is to be paid by payer

These include among others allowances and services provided under the title of representation and business gifts; products and services given to all employees (or, based on employer’s internal regulations, to certain groups of employees) free of charge or at discount prices; meals and other services related to business travel. The tax base shall be 1.19 times the value of the allowance, to be paid by the payer / employer. The tax rate is 16%. Besides the personal income tax, the payer, employer is obliged to pay 27% health care contribution.

Fringe benefits

These include among others, with various thresholds per benefit, benefits provided by the employer free of charge or at reduced prices like:

• passes or tickets for local public transport,
• meals,
• “Erzsébet vouchers” to purchase food,
• several holiday services at holiday homes owned by the employer;
• certain amounts transferred to the benefit of private individuals to voluntary pension insurance and health insurance funds.

The tax base is 1,19 times the value of the allocation which has to be paid by the payer (employer). Tax rate is the flat 16%. Besides the personal income tax, the employer is obliged to pay 14% health contribution.

Low interest rate loans

In case of interest free or low interest loan extended by the employer payable by the payer or the employer. When profit from interest-free or low interest rate loans is established, the base rate of the National Bank of Hungary plus 5 percentage points serves as a benchmark to which the interest actually charged must be compared.

Income from interest allowance is tax-free in cases adjusted by the law.

Shares and options

If a company grants its employees shares under an employee stock option scheme approved by the National Tax and Customs Administration, no taxable income is generated if the total regular market price of the securities thus acquired is lower than HUF 1 million.

Pensions

“Pension” means

• state pension,
• pension payments provided by a private pension fund,
• income defined as pension in the provisions of treaties on the exclusion of double taxation.

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