A great opportunity to reward employees is the small-value gift that can be given up to three times a year, which can be a gift voucher, a service, or a specific item, such as a book. However, the employer’s responsibility does not end with requesting a receipt for the purchased product or voucher and submitting it to accounting: information must also be provided to payroll, and the data must be recorded in internal records.
Low-value gifts are
subject to taxation as specific fringe benefits and can be granted not only to
employees but also to their close relatives, up to three times per year. The
value of each gift may not exceed 10% of the minimum wage, which in 2025 is HUF
29,080 — meaning a total of HUF 87,240 can be given to one person annually. The
gift can be a product, a service, or a voucher; however, vouchers must be
limited to specific products or services — for example, redeemable only in a
particular store or for a defined product category.
How are low-value gifts taxed?
The taxation of low-value gifts is very favourable, with a total burden of only 33.04%. The tax base is 1.18 times the value of the benefit, on which 15% personal income tax and 13% social contribution tax must be paid.
What happens if the rules regarding low-value gifts are not followed?
If the above-mentioned
rules are not followed, the full amount of the low-value gift will be
considered income from employment and will be taxed as salary.
For example, if
·
the value of the gift exceeds 10% of the minimum wage,
·
or a person receives it more than three times,
· or it does not meet the conditions for non-cash benefits according to the personal income tax law,
then 46.5% tax must be paid on it.
Under what conditions can a gift voucher be considered a non-cash benefit?
If it can be
determined
·
in which product or service category it can be used,
· and it is non-redeemable.
What does it mean that a voucher can be used for only a specific range of products or services?
For example, a voucher
issued by a bookstore chain can be redeemed for a specific range of products,
meaning it is acceptable. In contrast, general vouchers issued by hypermarkets
with a wide selection of goods could be redeemed for a wide variety of products—from
groceries to electronics to clothing—therefore, these are clearly not
acceptable.
The real dilemma lies
with vouchers from smaller retail chains that offer several different product categories,
yet are still somewhat specialized. In such cases, it is not always clear
whether the voucher is acceptable. This category typically includes drugstores,
where one can also purchase items like food. For this reason, it is advisable
to consult with the payroll colleagues before purchasing the voucher, to ensure
the tax treatment of the selected voucher is clearly understood.
What are the employer’s obligations when providing low-value gifts or gift vouchers?
As has already become clear from the above, it is advisable to discuss the plan with the accountant or tax advisor before making a decision or purchase. For example, it should be clarified for what purpose, how often, and in what form such a benefit would be provided to employees, and which specific product or item is being considered. If accounting and payroll are handled by different people, it is important that both colleagues receive the necessary information, as gift vouchers can also be recorded in the payroll system, which can simplify their tracking.
It is important to request a receipt in the employer's name when purchasing gift vouchers and gifts. Although the salesperson should know what kind of receipt they are required to issue, it is worth being aware of the basics:
-
Either an invoice must be issued in the name of the
employer for a single-purpose voucher,
-
or a receipt must be issued for a multi-purpose
voucher.
Nevertheless, due to the rules outlined above, only single-purpose vouchers can be considered as small-value gift taxed as specific allowances, as the place of performance and VAT rate of the product or service sold by them are already known at the time of issue. In the case of multi-purpose vouchers, this information is not necessarily known, as they can be redeemed for a number of different products.
What kind of internal records or documentation must be kept regarding low-value gifts and gift vouchers?
In the case of
low-value gifts, the employer or the person exercising employer’s rights is
required to keep the following records:
•
the date of the benefit,
•
the value of the benefit,
•
the name of the beneficiary,
•
the form of the benefit (e.g. type of voucher, name of
the shop, invoice number),
•
the purpose of the benefit,
• number of occasions.
An Excel spreadsheet is perfectly suitable for this purpose; the important thing is to be able to prove the legality of the benefit to the tax authority if needed.
Should you
have any questions concerning the practical implementation or administration of
gift vouchers or other fringe benefits, do not hesitate to contact the
experienced advisors and payroll experts at LeitnerLeitner.
