Changes in the rules for determining the interest income

Employers have to examine the value limit as well for the interest-free housing loan disbursed after 1 January 2019.

Until 31 December 2018 employers had the opportunity to provide housing support for employees up to the 30% of the costs, but a maximum of 5 million forint for 5 years. However, the legislative changes - adopted last year – cancelled the tax exemption for the housing support.

Nevertheless, it is still possible to provide an interest-free or discounted loan to employees. From this year, if the amount - paid to the same individual - does not exceed HUF 10 million in the four years prior to the year of disbursement, the employer will not have to establish interest income, if the prescribed conditions are met. While the legislator introduces a value limit on the discount, at the same time it has abolished compliance with the reasonable housing requirement from the criteria; this way it also reduces and expands the possibility of using the exemption at the same time.

Considering the opportunity, employers may worth to include the tax-free credit into their benefit system. However the amendment also contains changes in terms and in the interpretative provisions, thus it is recommended to proceed with caution.