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Rising utility bills: employers can help tax-free, here's how!

 Blog / Rising utility bills: employers can help tax-free, here's how!

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Rising utility bills: employers can help tax-free, here's how!

The Government Information Centre issued a statement today, which shows that from 1 August, 1.4 million consumers will be affected by the expected drastic increase in electricity prices, and 900 thousand consumers will be affected by the drastic increase in gas prices.


Dr. Roland Zsidi, chief lawyer at ICT Legal, Dr Termel Law Office, points out that it is only now that employers and employees will seriously consider the reimbursement of teleworking costs, given the expected increase in wage demands in line with rising overheads.

During the crisis caused by the coronavirus epidemic, the reimbursement of teleworking expenses was introduced and regulated by law as of 1 June 2022; Annex 3 of the Personal Income Tax Act (in short: "Income Tax Act") was supplemented with the legal measure formerly known as "overhead allowance". This legal instrument allows employers to pay employees who work remotely, by agreement between the parties, a monthly amount of up to 10% of the monthly minimum wage on the first day of the tax year (HUF 20,000 per month in 2022), tax-free.
Today, in the vast majority of cases, the home office is a basic requirement for employees in job interviews and practice shows that a significant proportion of employees telework for part or all of their working time. Due to the previously 'tax deductible' invoices, only a few of them, or the employer, have so far claimed this tax-free allowance. In the light of these developments, it is worth reconsidering whether to make use of this tax-free reimbursement, as salary increases entail much more expenditure," says Dr Roland Zsidi, senior lawyer.



To whom, for what and how can the 'overhead allowance' be given?

 

It can be given to employees who work in the context of teleworking. Since it can be granted without justification, it is not necessary to specify or provide invoices or receipts to prove which expenses are charged to the expenses incurred in connection with teleworking.

It is important to note that both the employment (and its details) and the reimbursement of expenses in the context of teleworking must be agreed in an employment contract (amendment to the employment contract), and the reimbursement of expenses can only be formally granted to the employee in this way.

 

The current maximum amount of HUF 20,000 can only be granted if the employee telecommutes 100% of his/her working time.

If the teleworking does not cover the whole month, a proportion of the monthly amount proportional to the days of teleworking can be paid, the lawyer warns.

The employer must lay down the rules and details of the safe and healthy working conditions required for the work, which should be set out in a summary of the teleworking (home office) regulations, together with other details of the teleworking arrangements.


Other alternatives?


In addition to a flat-rate allowance, another option is for the teleworker to justify his or her expenses in connection with teleworking and to have them reimbursed by the employer (also tax-free).


Therefore, the subsistence allowance can only be granted if the employee does not account for any other expenses in connection with the teleworking as described above.


Such costs may include the cost of Internet use, the rent of the property where the work is carried out and overheads (heating, lighting, technological energy) (under Annex 3, Chapter I, Section 24, points c) and d) of the Tax Act).

However, in relation to overheads, if the dwelling and the place of work are not technically separate, these expense(s) may be taken into account in proportion to the teleworking activity, based on the units of measurement (working time, m2, m3, etc.) specific to the expense.

It is therefore worth considering itemised cost accounting if the employee's monthly expenditure on teleworking exceeds HUF 20,000.

According to our experience so far, employers rarely use the flat rate for overheads, and even less often the itemised billing of overheads as described above, but with the expected increase in electricity and gas prices, this trend may reverse," says Dr. Roland Zsidi, senior lawyer at ICT Legal, dr. Termel Law Office.



Could the Home Office trend reverse?


With the rise in overheads and without the introduction of telecommuting allowances, it is conceivable that the currently popular and growing trend of working from home could be reversed, as the rise in overheads will mean significant costs for employees to save by working in a traditional office.


However, many employers have already designed working conditions to reduce office capacity and space, so colleagues opting to work in the office in droves will also present a challenge for employers.


In light of the above, it may be worth considering an increase in the tax-free rate of the overhead rate," suggested Dr Roland Zsidi, senior lawyer at ICT Legal, Dr Termel Law Office.


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