Hungarian FinMin allows compromise on fringe benefits in 2019 budget

The government plans to review its tax proposals for 2019 in light of the parliamentary debate on these issues, finance minister Mihaly Varga said, the news portal Portfolio reported. Varga referred to the controversial case of the fringe benefits, about which the draft 2019 budget envisages almost complete removal of the preferential tax treatment. Employer contribution for domestic tourism spending of workers will be the only item subject to tax relief, according to the current proposal. The government earlier signaled that it is firmly decided on this measure while Varga did not rule a revision and looser restrictions on the fringe benefit system. In particular, he said that health insurance contributions and pension fund savings might be also included in the scope of fringe benefits eligible for tax relief.

The government has committed to examining the cost implications from the employer association and trade union proposals on the fringe benefit system, head of the trade union confederation Laszlo Kordas said for the daily Nepszava. As we reported, trade unions proposed relocation support, pension saving, student loan repayment and school support to be left in the fringe benefit system and also that social partners agree on fixing the system’s scope for the next four years to avoid complications.

The government has not provided comprehensive assessment on the budgetary cost of the proposed restrictions on the fringe benefit system. It has also argued that the measure will not have significant negative impact on employees while trade unions claim that some 2mn workers will lose an average of HUF90,000 per month as a result of the reduction in fringe benefits.

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