In the course of the past few years many employers have decided to provide various benefits to their employees within the framework of a cafeteria-system, capitalizing on the fact that such benefits were exempt from taxation up to a certain limit and, therefore, it was possible to pay out up to HUF 400,000 per year to each employee without the significant levies that burden salaries. As a result, the turnover of the cafeteria-systems at Hungarian employers has increased to over 500 billion forints per year. Faced with the challenges resulting from the economic difficulties of the Hungarian economy, the Parliament has decided to make employee benefits taxable from 2010 as a part of the comprehensive amendment package intended to reshape the existing tax regime, which was passed by the Parliament on June 29, 2009.
The most popular items of cafeteria systems – travel passes, holiday vouchers, luncheon vouchers for warm meals, support for studies and contributions to voluntary pension funds – will become subject to taxation at a reduced rate (applicable to the portion which has been tax exempt) of 25 percent, payable by the employer. The tax rate will be 30 percent for contributions to a voluntary health fund. Certain benefits, however, – e.g., vouchers for cold meals and vouchers usable for cultural services – will no longer entail any tax benefits.
The changes also include beneficial ones: there will no longer be a limit on the combined value of benefits that may be provided at reduced tax rates; and the limits applicable to individual benefits will be raised in many cases (e.g. in the case of luncheon vouchers for warm meals, from HUF 12,000 to HUF 18,000 per month).