The rules for remote working have become more flexible for the duration of the emergency
Government Decree 487/2020 (XI. 11.) which entered into force on 12 November 2020 made the rules of remote working more flexible for the period of the state of emergency.
The Hungarian Labour Code (“Mt.”) defines remote working as a regular activity in a location separate from the employer's premises, which is performed by a computer device and whose results are transmitted electronically. In addition, the Mt. regulates remote working in several respects, which regulations may be deviated from for the period of the emergency in accordance with the Government Decree. This also means that in the employment contract, even the so-called home office may be treated as remote working according to the Mt.
As a general rule of the Hungarian Personal Income Tax Act, certain cost reimbursements granted to employees in connection with the remote working under the Labour Code are considered as tax-deductible items. If the employee duly proves that such costs have been incurred, the related reimbursement should not form part of their income. Contrary to this general rule, under the provisions of the Government Decree, during the state of emergency the monthly amount capped at 10 per cent of the minimum wage valid on the first day of the tax year (HUF 16,100 in 2020) paid to a remote worker should be considered as tax-deductible without any supporting documents. However, even in this case, the employee’s employment contract should include the possibility of remote working. Therefore, if the employer wishes to take advantage of the simplification under the Government Decree, it must amend the employment contracts accordingly.
The condition for the tax deductibility without supporting documents is that the individual is not eligible for the cost reimbursements under the general rule, which the Government Decree refers to (namely internet usage fee, rental fee, heating, electricity and other technological energy fee). On the other hand, this also means that if the employee's monthly expenses for these types of costs exceed 10 percent of the monthly minimum wage, the entire amount can still remain tax-deductible if proper supporting documents (invoices, itemisations etc) are provided. Therefore, in such cases it may be not worthwhile to opt for the "flat rate reimbursement" set out by the Government Decree.
If the remote working does not affect the whole month, then only the apportioned (based on the eligible days) part of the above monthly amount should be deemed tax-deductible without supporting documents during the state of emergency.
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VGD Hungary's tax experts are constantly monitoring the latest developments in the field of the government tax regulations related to the period of the state of emergency.
Should you have any questions regarding this newsletter, the tax experts of VGD Hungary will be pleased to assist you. This newsletter provides general information and does not constitute tax advice.
