Adómentes lakáscélú juttatások ellenőrzése

Subsequent audit of tax-free employee housing support

Employee support could be provided tax-free for housing purposes and for the final repayment of or repayment on housing loans until the end of 2018.

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József Vizer, RSM Hungary, Tax manager, Tax expert

József Vizer

Tax director

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After the elimination of this benefit form, the employers and employees concerned still have important administrative tasks to fulfil in order to minimize the relating tax risks. 

For what purposes could the tax-exempt employee support be provided?

  • Acquisition by way of a sale and purchase transaction or other onerous contracts of the ownership of a flat located in Hungary and the land use right relating to the flat (including the closed-end leasing of the flat), 
  • a building of a flat in Hungary or having a flat built in Hungary, 
  • increasing of the floor space of a flat located in Hungary generating an extension by at least one room for living, 
  • modernization as defined in the government decree, 
  • transformation for the purpose of accessibility for the disabled, 
  • final repayment and repayment of a loan taken out for housing purposes. 

What qualified as tax-free employee housing support?

  • Non-refundable support 
  • provided to the employee 
  • for housing purposes 
  • through a credit institution, based on the credit institution’s certificate, including 
    • the forgiven amount of housing loan provided by the employer and 
    • the support provided for the final repayment or repayment of or payment of other obligations relating to a housing loan taken out from a credit institution, financial enterprise or a former employer 
  • up to the amount of 30 percent of the purchase price or total construction, modernization or disabled accessibility makeover cost 
  • but in a maximum amount of 5 million forints in the case of multiple employees including the amounts paid under this title in the four years before disbursement 
  • provided that the number of rooms in the flat does not exceed the justified housing need. 

Why should the tax-exemption of the support provided be tested subsequently?

The subsequent testing of the exemption of the support provided from tax and their actual use is important basically in order to avoid tax risk because if the employee is unable to certify to the employer within the prescribed deadline the fulfilment of the conditions of tax exemption and the complete use of the support received presenting the documents prescribed by the legal regulation, the housing support provided cannot be regarded as exempt from tax but its amount increased by 20 percent will qualify as taxable wage income on which both the employer and the employee will have tax and contribution payment obligation. 

What cost does it imply if the support provided is subsequently determined not to be tax-free?

If the conditions of tax exemption are subsequently revealed not to be satisfied in the case of a housing support of 5 million forints disbursed tax-free earlier to a certain employee, the following public burdens will be payable: 

HUF
Total amount of housing support 5 000 000
Tax base (amount of the support provided increased by 20%)6 000 000
Total amount of public burdens payable by the employee (33.5%) 2 010 000
Total amount of public burdens payable by the employer (21%)1 260 000
Total wage cost6 260 000
Total amount of public burdens payable subsequently3 270 000

It must be noted that during the audits, the inspectors of the tax authority may ask for certification of the legitimacy of the support provided tax-free for many years to come. The ad-hoc obtaining of the missing documents during an audit is, although not impossible, may be very difficult, especially in respect of employees who left the company in the meantime. 

Why should you use our Tax-free employee housing support service?

We offer our service to employers who do not wish to leave the testing of the fulfilment of the conditions of tax exemption of the housing support granted tax free earlier to the very last minute and need an expert team providing professional assistance in the testing of the correctness and completeness of the documentation. 

Why should you turn to us for the testing of the actual tax exemption and the legitimacy of use of the tax-free employee housing support provided earlier?

Upon request, our qualified experts with practical experience carry out comprehensive tests of the documents submitted by employees. 

As part of the testing of documents, our expert team fulfils the following tasks:

  • we inform the company and the employees in the form of either personal consultation or a written letter of tax advice of the scope of documents necessary for the test; 
  • we collect and review the documents provided; 
  • we prepare a record of the supports granted and the employees who received support; 
  • we systemize paper-based certification documents on site and digitalize these for easier keeping and archiving; 
  • if the tax exemption and the use of the support provided previously is not certified comprehensively, we notify the employer and the employee of the missing/inadequate documents; 
  • if necessary, we prepare a tax calculation; 
  • we summarize the overall experiences of the complete testing process. 

In the case of specific requests, we make special offers depending on the number of employees and supports provided.


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