In our first article, we summarised what kind of tax-efficient benefit elements and schemes employers can consider for physical workers (blue-collar employees) under the current Hungarian tax rules.
In our second article on the topic, we look at the options for companies to increase the motivation and commitment of intellectual workers (in other words white-collar employees) through tax-efficient benefit system.
- 'Classic' benefits
Benefits not regarded as fringe benefits, SZÉP-card and tax-free benefits listed in our previous article may also be an appropriate and tax-efficient form of benefit for white-collar employees..
In addition to these, other allowances could also be considered as alternatives for intellectual workers. The following are some of the more popular examples of tax-free benefits:
- company carfor private use and goods and services related to the maintenance and use of the company car (e.g. highway vignette, fuel);
- reimbursement of car-sharing service fees;
- if certain conditions are met, a housing loan (even interest-free) up to HUF 10 million over a period of 5 years for the construction, purchase, extension, modernisation, or accessibility of the employee’s own home, or for the repayment of any loan taken out for the above purpose from a credit institution or former employer.
In addition to the above, other forms of benefits are of course also introduced, based on the needs of intellectual workers. However, in these cases, it is advisable to proceed with caution and to determine the tax consequences on the basis of the actual circumstances and conditions of the benefit, persons concerned, etc.
For example, it makes a difference which employee (or even a family member) receives free coaching, psychological or mental health services, or even English language courses or other soft skill trainings, and under which circumstances, and thus whether the benefit provided becomes taxable as a salary or a benefit not regarded as fringe benefit.
- Share plans
It is mainly in companies and groups of companies with an international background that we can find so-called share plans for white-collar employees, especially for key employees. In our experience, more and more companies and groups of companies with a Hungarian background have recently recognised the motivational and other advantages of this type of benefit scheme and are making use of this opportunity.
In this case, the employees participating in the share plan typically receive shares from the company or group of companies with certain rights, as a result of which they become directly involved in the efficient operation of the company, group of companies, its financial growth, etc.
It is also true for this form of benefit that the tax consequences of the provision of shares to white-collar workers depend to a large extent on the circumstances and conditions of the scheme. Some forms of share plans are treated favourably by the tax rules and as a result employers can offer them at a lower tax burden than the regular salary. For this reason, the way in which a company or group of companies sets up and runs these incentive schemes is also relevant for tax purposes.