As one of the government measures intended to boost the economy, the use of the SZÉP card will be extended again. Starting from 1 August, customers can use their card for buying groceries. This way you as an employer can also provide better fringe benefits to your Hungarian employees.
SZÉP card in Hungary
The SZÉP card is one of the most popular fringe benefits in Hungary. It lets employers provide their employees with “non-salary compensation” at a tax rate that is more favorable than regular salaries while giving some boost to those businesses of the hospitality sector that accept the SZÉP card. For more than a decade, SZÉP card funds have been available for:
- hot meals (at restaurants, diners, cafés, etc.)
- holiday accommodation (hotels, hostels, etc.)
- cultural activities (theaters, museums, art galleries, zoos, etc.)
Originally, the SZÉP card had three separate “pockets” for these purposes. Starting from January 2023, however, these pockets have been abolished, and users can spend the fringe benefits wired to their SZÉP cards on these purposes as they please.
Employers can normally wire HUF 450,000 / year to an employee’s SZÉP card at the beneficial tax rate. Above that limit, the taxes payable increase, but still remain below standard salary rates.
Changes to the SZÉP card over summer 2023
To give another boost to Hungarian economy, last week it was announced that, for a limited time, the SZÉP card will be available for grocery shopping as well. Customers will be allowed to use their SZÉP cards to buy food other than hot meals between 1 August and 31 December 2023. (It was emphasized that the funds cannot be used for buying alcoholic beverages or tobacco products.) A similar arrangement was already in place once back in the first half of 2022, and now the government expects a similar success.
At the same time, the yearly limit for a beneficial tax rate has been increased to HUF 650,000. More precisely, employers are allowed to provide a one-time allowance up to HUF 200,000 above the regular yearly limit.
Taxes on the SZÉP card fringe benefits
Many employers choose the SZÉP card as a form of compensation because this type of fringe benefit is easy to manage while it is taxed more favorably than regular salaries.
|Regular salary||46.5%||15% personal income tax + 18.5% social security contribution + 13% social contribution tax|
|SZÉP card up to the limit||28%||15% personal income tax + 13% social contribution tax|
|SZÉP card above the limit||33.04%||tax base is 118% of the compensation, 15% personal income tax + 13% social contribution tax|
As a result, the SZÉP card remains popular among both employers and employees.
Find the best partner for your finances
Providing fringe benefits for your employees at your Hungarian company might be an excellent way to recruit and retain talent. However, whether creating and maintaining a fringe benefit plan is beneficial for your company depends on your finances. Consult your Hungarian accountant to learn more about your options.
The Helpers Finance Team gives you the support you need for making informed decisions about the future of your business in Hungary. We specialize in working with small and medium-sized businesses, with a special focus on supporting foreign managing directors.
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