The wine will be a tax-free company allowance

The decree will come into effect on November 16th and will be valid until the end of the state of emergency, which, as of our current knowledge, will be November 25th, lasting for about 10 days. There is a good chance that the state of emergency will be extended, making wine gifts for Christmas and year-end events tax-free as well.

The decree allows for certain specified wine gifts, which were previously subject to tax when given as representation, non-representation-related hospitality, business gifts, or minor value gifts, to be tax-exempt from November 16th until the end of the state of emergency.

Typically, a tax of 33.04% (consisting of 15% personal income tax and 13% social contribution tax) was imposed on these gifts. With the new decree, this tax will be reduced to zero for the specified wines listed in the regulation.

These tax-exempt gifts include wines provided during representation or non-representation-related hospitality events, business gifts, and minor value gifts. The exemption will apply until the end of the state of emergency, which, as mentioned earlier, is currently set to be November 25th.

While representation-related hospitality refers to hospitality provided during business, office, professional, diplomatic, or religious events, non-representation-related hospitality is less defined in the tax law. It may include, for example, a company hosting its own employees at a year-end party.

Business gifts are those given in the context of business, office, professional, diplomatic, or religious relationships, either for free or at a reduced price. Meanwhile, minor value gifts are gifts given to employees once a year, up to a maximum of one-tenth of the minimum wage (which is 23,200 forints this year), provided that proper records are kept.

This means that employees can receive wine as a tax-free gift from their employer, up to the specified value, during Christmas, as long as the state of emergency is extended. If the employer provides other minor value gifts throughout the year, the cumulative value of these gifts should not exceed the maximum limit.

Fata László, a cafeteria expert and wine specialist, suggests that tax considerations are important for gift planning. Wine is a common choice for gifts and is often given as an end-of-year “thank you for being our partner” present. It can also be included in gift packages at conferences and lectures as a token of appreciation for speakers.

Fata László points out that providing wine as a gift can be more cost-effective for employers than other options with a 33.04% tax rate, such as chocolate. Therefore, tax considerations play a significant role in gift planning.