Based on act number LXXXIII of 2010 on the modification of certain statutes related to sport events and published in issue number 129 of the Official Journal of Hungary on 10 August 2010 it will be possible to add a new tax-free element to our cafeteria plans in the rest of this year – and probably in the next year as well. Since this modification is quite new, the planned modifications of the personal income tax of 2011 are not expected to affect it so maybe we can calculate with it in our 2011 cafeteria plans as well.
The act restored the tax-exemption of the cups and medals of minor value that was abolished in the recent past and it classifies the medals and trophies won at sport competitions or sport contests as tax-free contributions among the in-kind contributions once again regardless of the amount. The modifications made the Olympic benefit tax-exempt again.
The modification of the act on personal income tax
The proclaimed act modified certain provisions of the act number CXVII of 1995 on personal income tax, particularly its 1st annex to be exact. The following points were added to it:
“Among the in-kind contributions the followings are tax-exempt
…
8.28. ticket or pass for sport events provided for free or with discount
a) by a company organizing sport events and providing these within its activity (except if it is provided upon the request of another),
b) for the same private person in the same tax year by the same provider up to the value of 50 thousand forints;”
This modification enables you to involve an element with a relatively higher value into your cafeteria plan so widening the scope of the possible choices. Furthermore this is a tax-free element – contrary to the current tendency of putting tax burden on cafeteria elements.
Usability
The voucher providing companies also want to use the possibility of the new tax-exempt element of course, so it was added to the list of their vouchers as a new product with different names (‘Hajrá voucher’, ‘Sport voucher’, etc.). The voucher can be used for purchasing tickets or passes for sport events at ticket agencies and sport clubs that are contracted for its acceptance. It is an additional benefit that beside regional and national sport events it can be used even for visiting international sport events.
Tax-free year-end bonus
This tax-free benefit can be used even as a year-end bonus since the vouchers ordered now are valid until the end of the year 2011. As a result of this the cafeteria benefit provided from the amount of this year’s 2011 cafeteria plan can be used in 2011 as well.
Appreciate it!
The expected modifications of tax and contribution regulations for 2011 are going to restructure the taxation of the elements built into cafeteria plans once more. Although the tax burden of the benefit elements may be decreased, the basic elements of the off-salary benefits will continue to have a preferential tax rate. However the voucher related to sport events as a tax-free off-salary benefit element can be a cost-efficient solution in the future.