MTÜ: Government proposals further strengthen the competitiveness of domestic hospitality

By: Trademagazin Date: 2024. 11. 19. 11:32

The Ministry of National Economy recently submitted proposals determining the maximum amount of the service charge, ensuring the tax exemption of tips and modifying its payment. Based on the draft service charge, catering establishments can set a maximum of 15% for household consumption and 20% for corporate events. It is important, however, that the application of the service charge – in accordance with current legislation – remains voluntary, and catering establishments can decide on it in order to appreciate their employees and increase their benefits.

The proposal regarding tips also stipulates its tax and contribution exemption and modifies the conditions of payment in order to ensure that employees can always receive the extra remuneration due to them from guests without deductions. The Hungarian Tourist Agency welcomes the drafts supported by professional organizations, as they will not only allow those working in the hospitality industry to earn more income, but the sector’s ability to retain workers may also increase.

Tourism is one of the most important drivers of the new economic recovery. The sector’s contribution to the national economy is more than 12%, and more than 10% of the central budget’s revenues are generated by tourism-related consumption and employment. The social importance of the industry is clearly demonstrated by the fact that nearly one hundred thousand small and medium-sized enterprises operate in it, thus tourism provides a livelihood for approximately 400 thousand families in our country.

“A higher service charge for corporate events can significantly strengthen the competitiveness of domestic hospitality and, more broadly, the entire tourism sector. International business events, conferences and congresses hosting a large number of delegates can significantly contribute to the strengthening of inbound tourism. The new maximized rate will enable domestic service providers to provide competitive wages to their employees who perform high-quality professional work and who are employed at these events that meet international needs. This way, not only the amount earned by employees can increase, but also the sector’s ability to retain its workforce can increase significantly”

– highlighted László Könnyid, CEO of the Hungarian Tourism Agency. He added that the 15% maximum rate for household consumption contributes to strengthening the competitive market position of smaller, typically family-run catering units. It is important that, in accordance with previous regulations, caterers will still not be required to apply a service charge. However, if they do so, it will be part of the bill, and the amount received from it will be the service providers’ income, which they can continue to use exclusively to pay their employees’ wages.