Here comes the tax-free occupancy support

Dr. Korim Balázs / Legal insights / January 26, 2017

From this January, tax-free occupancy support will be provided to the employees. The aim is to promote the mobility of the employees living further, therefore to contribute to the fights against manpower shortage and unemployment.

What amount of support can be given?

According to the 2nd point of the first Appendix of the Law on Income Tax, the support provided by the employer, is – referring to the mobility aim associated with the monthly value of the flat – the maximum amount of 40% of the minimum wage in the first 24 months of the employment, 25% in the second 24 months and the 15% in the following 12 months. All in all, in the first 5 years of employment, although in a digressive measure, insofar as the legal conditions are valid the Employer can prove tax-free occupancy support to the Employee.

What type of support can be given?

The law describes several cases of the determination of the value of the support, making it possible for the employer or the employee to appear in a rental relationship. The law describes that as the monthly value of the occupancy support, from the monthly rent of the flat rented by the employee and verified by certificate, the part recompensed by the employer; from the monthly rent of the flat rented by the employer and verified by certificate the part did not recompensed by the employer, as well as from the usual market value of a flat being the employer’s ensured living shall be taken into consideration.

Who can get tax-free occupancy support?

It appears to be an important condition of the tax-freeness of the allowance that it should be given to an employee who has an employment of indefinitive duration and at least 36 hrs of working time per week and whose permanent residence is at least 60kms far from the workplace, or whose daily trip with public transport takes more than 3 hrs.

It is also a condition of tax-freeness that the employee in the time of the provision of the support in the last 12 months did not and now does not own a flat or house, neither has a beneficial ownership in the place of work or in any location closer than 60kms or the daily tip with public transport does not reach the 3 hrs to and back.

As a restriction, the law describes that in that case if in the flat rented by the employee more than one individuals are entitled to benefit from the occupancy support, only one of them can apply it.

The law imposes some administrative obligations to both the employer and the employee, although independently all of these, it can be expressed that the tax-free occupancy support is a significant element that can have an effect on not only the employees but on the entire labour market.

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