To see fringe benefits in Hungary in 2019, click here.
In Hungary, fringe benefits are regularly referred to as cafeteria. This means that apart from salary, employees can receive a “non-salary compensation”. The various fringe benefits or cafeteria elements offer more favorable taxation options than regular salary – this is why many employers decide to offer cafeteria to their employees.
When you receive money in exchange for the work you perform for your employer, you can spend that money any way you want, no questions asked. When you receive cafeteria, the way you can spend it is determined. For example, you can spend it only on hot meals. This helps economy become more transparent, and in exchange the government provides tax redemption, or even tax exemption to the users.
How cost-effective is cafeteria?
In Hungary, ca. 45% of the total salary cost is taxes and contributions (part paid by the employee, part paid by the employer). In comparison, cafeteria elements are taxed at lower rates. Moreover, in this case, tax payment is the employer’s liability, while cafeteria elements are tax free for the employees, this way further increasing their net income.
In the below list, the amount are net amounts, on which the employer pays the indicated taxes to the authorities.
The cafeteria elements listed above may be combined in any amount, but they are limited in HUF 450,000 (ca. EUR 1,500) per year. For example, you can offer your employee HUF 100,000 in cash and HUF 350,000 on the SZÉP card (distributing it among the 3 pockets in any way you agree on).
Tax free cafeteria elements are often subject to more thorough investigation, so make sure you meet all conditions before deciding on them.
When you are developing the cafeteria plan for your Hungarian company, ask for the expert help of your English-speaking accountant, who can explain all the current regulations. This way you can optimize the amount of taxes you pay after your employees. There is no government regulated cafeteria structure you have to apply, but the cafeteria plan structure at your company should be transparent and available to all your employees. In any case, ask your accountant, or especially your payroll advisor about your options.
If you already have a cafeteria plan: it is January, make sure to update your cafeteria plan, and send a notice to your employees!
Last updated: 12 January, 2018.
To see fringe benefits in Hungary in 2019, click here.
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