Employer contribution
[extract]
Benefits for companies, corporations:
- adjustable to the companies’ financial capabilities,
- can be flexibly changed according to changing needs,
- the amount paid can be accounted for as an expense, thus reducing the social tax base,
- simple and cost-effective, because since 2018 you can be given an unlimited 15% personal income tax and 19.8% health contribution at the reduced employer benefits rate,
- its benefits are straightforward and easy to use for employees.
Benefits under a reduced tax rate contribute greatly to increasing competitive advantage because they are easy to plan for and significant savings can be achieved by introducing them. Illustrating the competitive advantage with an example: a net wage increase of HUF 100,000 costs the employer HUF 180,000 for an employee without children, while a self-help fund benefit of HUF 100,000 only costs HUF 141,000. A wage payment in this case costs the company nearly 40% more than giving it as a fringe benefit. The IZYS Health and Self-help Fund, also popular for employer benefits, offers favourable conditions as well as saving taxes and contributions. In addition to the employee satisfaction benefits, individuals can take advantage of an added 20% tax credit after their payments. Employer contributions can be flexibly selected and shaped from the perspective of the company and the company management.
Aspects:
- one-off reward-like benefit,
- regular salary supplement,
- a uniform allowance for all employees,
- fringe benefits/employee benefits
There are pros and cons for each aspect, depending on the companies’ financial abilities and the age composition of its employees.
Optional fringe benefits – also known as employee benefits
Nowadays the most fashionable form of managing favourable tax benefits is through employee benefits also known as fringe benefits. The essence of the system is that the company’s directory specifies a spending limit for every employee, within which the employee can decide themselves when, in what form and what amount they spend in different areas (e.g. this amount for a meal ticket, that amount for a self-help fund, etc.) This system is the most democratic system for employees because everyone can spend their limit according to their own goals and age. However, it is also the most costly to implement and maintain. You can find further information here.
Benefits
For those who do not want to introduce an optional and expensive fringe benefit system, though at the same time would like to take advantage of tax benefits, would find a self-help fund very beneficial. The Izys Self-help Fund is often treated as a “small fringe benefit system” due to its wide range of possible areas one might want to spend their money. A lot of companies choose to give self-help fund benefits to all employees without leaving them a choice. The reason for this is, on one hand, the self-help fund provides services for a very large range of people (e.g. medicine, schooling, retirement savings), on the other hand, the benefit must be used with a contracted service provider, though its application and operating costs are significantly lower than in other employee benefit systems. You can find further information here.
Mandatory elements of the contract
An employer member is a natural or legal person, or a company without legal personality who, under a contract concluded with the Fund, assumes part or all of the employee’s obligation to pay membership fees (employer’s contribution). If the employer has a choice between individual fringe benefits, ie an employer benefit system is in place, the employee may waive all or part of the employer’s voluntary fund contribution and choose another benefit instead. The employer’s contribution must be the same amount for each employee or allocated based on the relating percentage of an employee’s salary. In the latter case, the employer may determine both the minimum and the maximum amount of the contribution. The payment of the contribution is not obligatory for the employee if the member requests it in writing from the employer. It is also not obligatory to pay the contribution for employees who have not been employed by the employer for six months. The employer has the right to suspend the payment of the employer’s contribution for the periods when the employee’s employment is terminated or not paid for wages.
Concluding the contract
Please indicate your need to enter into a contract at our customer service at 06 1 769 0061. Our corporate consultants will assess your needs so they can find the best possible solution for your company.
Payment and declaration
Simultaneously with the start of the transfers, a list of the membership fees to be transferred must be sent to this email address: [email protected]. The template used by the Fund can be downloaded here.
In previous years employees were required to declare where they would receive such a benefit from their company. Since the benefit can now be granted without a value, limit, since 2017, it is no longer necessary to declare employees based on the National Tax and Customs resolutions.
