Introduction
Pursuant to Government Decree No. 403/2024 (XII. 18.) on housing allowance for employees (hereinafter the “Government Decree”), published in December last year, employers may provide housing allowance to their employees within a specified budget starting from January 1, 2025. This new type of non-wage benefit is also beneficial for employers, as it is subject only to a 15% personal income tax and an 18% social contribution tax. This article summarizes the main questions and considerations related to this allowance.
Key questions and advantages of the benefit
Housing allowance is available to employees under the age of 35, with a maximum annual amount of HUF 1.8 million, equivalent to a maximum of HUF 150,000 per month, provided the employee’s employment relationship lasts throughout the year.
The allowance can be used to pay off housing loans or rent. According to the Government Decree, employees can request the allowance by specifying their housing-related purpose. Employers are required to transfer the amount of the allowance to the bank account provided by the employee. Although the Government Decree does not explicitly state this, the Government communication suggests that in case of loan repayments, employers may transfer the allowance directly to the banks. Currently, the situation remains uncertain as it is unclear whether new regulations will be adopted or if banks themselves will establish additional conditions.
It is important to note that employees bear the primary responsibility for compliance with the legal requirements related to this benefit. If an employee receives housing allowance in an amount exceeding what they actually pay for rent or loan repayments, the tax authority will impose a penalty for the difference; additionally, the excess amount will need to be paid as personal income tax.
Summary
Although the legislator has already established some basic rules regarding the allowance, we strongly recommend to employers to consider the following during its implementation:
- Establish internal policies outlining the conditions for providing the allowance, thereby minimizing tax and labour law risks and setting detailed rules in advance;
- Prepare an appropriate statement for employees requesting the allowance which justify the purpose and type of the allowance, as well as the details of communication;
- Identify the necessary documentation to be retained for verifying the allowance and ensure proper handling of this information from a data protection perspective.
Should you have any questions regarding the above mentioned, please do not hesitate to contact us.
(Image source: Timur Saglambilek, Pexels.com)