How are business expenses managed in Hungary?

For both the employee and the manager or approver of the expense in Hungary in the Horizons portal, it is essential to understand and adhere to the detailed requirements outlined in the attached document for submitting an expense claim. These requirements serve as a comprehensive guide to ensure that all necessary information and supporting documents are provided accurately.

Q: What are essential information required on Invoices

For all business expense claiming, the invoices must be stated with required content including:

Date of invoice issuance

Invoice number that identifies the invoice

Name, address, and tax identification number of the issuer

Name and address of the buyer, and it’s tax id as below:

• Name: Horizons Technológia Kft
• Address: Budapest, Váci út 45-building G
• Tax ID: 32293454-2-41

Description of the goods/services sold

Quantity of the goods/services sold

Net unit price of the goods/services (value excluding tax)

Net value of the invoice (value excluding tax)

VAT percentage and amount

Q:What supporting documents are mandatory for claiming expenses related to business travel?

 In the attached document, you will find a detailed list of required documents for various business expense scenarios e.g. business travel, teleworking, along with remarks on their limitations.

Q: What are non-Deductible and not reimbursable expense in Hungary?

Certain expenses are explicitly excluded from deductibility under Hungarian tax law:

Fines and Penalties: Any costs incurred due to regulatory fines are not deductible.

Personal Expenses: Costs unrelated to business activities, such as personal travel, cannot be deducted.

Gifts and Entertainment: Generally, these expenses are not deductible unless they directly relate to generating income.

Q: What are expense Expenses with Limitations in Hungary?

Some expenses have specific limitations on their deductibility:

Transportation Expenses: While most travel-related costs are deductible, they must be reasonable and directly related to business activities such as hotel lodge, air tickets, flight booking 

Meals, drink and catering: The expense such as Meal, food, catering, drink, events holding are all consideration as meal and entertainment expense which are subject to “Representation tax” in Hungary, at 33.04% of the gross value status on the invoice.

Meal expense to claimed at actual with invoice: In Hungary, the representation tax applies to expenses incurred for meals and entertainment, Initial to approval of expense as such, please also be aware of such tax burden 

e.g. to reimburse the Meal expense at HUF 500, employer are required to pay 

500*30.44%= HUF 165.2

as represention taxes

Q: What is the  Kiküldetési rendelvény?

Kiküldetési rendelvény is a form used in Hungary to document business travel expenses. It is essential for both domestic and international business trips. The form is used to record and justify the expenses incurred during business travel, ensuring compliance with tax regulations.

Required Information:

• Name and tax identification number of the employee.
• Details of the vehicle used (if applicable), including make, model, and registration number.
• Purpose, duration, and route of the business trip.
• Mileage and travel costs, including fuel consumption and prices.
• Any other relevant expenses, such as accommodation
  
  

Q: How to get VAT invoice buying train/Air Tickets 

For the tickets purchased on MÁV-START website, mobile app, you may obtain the VAT invoice as instructed in FAQ – domestic travel | MÁV-csoport 

For the tickets purchased on Wizz website, mobile app, you may obtain the VAT invoice as instructed   Wizz Air invoices

For the train/airline tickets for international travel, such as Welcome Card, you may obtain from the app or contact the customer service of the supplier for the (VAT)Invoice from the carrier with the essential information stated in attached file.  

Q: Is there any tax burden for the expense claimed for teleworking or work from home

The teleworking-related expense is capped at 10% the Hungarian mandatory minimum wage per month.(HUF 26,680 as 10% of 266,680 for 2024)

Regarding flat-rate expense reimbursement, the Personal Income Tax Act states that if teleworking does not cover the entire month such as hybird work place or business travelling claimed with Kiküldetési rendelvény , the employee is entitled only to the proportionate part of the monthly amount corresponding to the days of telework. This distinction is significant for employees working in a so-called hybrid system (i.e., only on certain days of the month) versus those working entirely from a location other than their workplace throughout their working hours. 

In the former case, due to the proportional adjustment, the employee will be entitled to less than the maximum tax-free amount.

Regulatory Framework

The primary legislation governing business expenses in Hungary is outlined in the Income Tax Act of 1995. This act provides detailed provisions on what constitutes deductible and non-deductible expenses, ensuring businesses comply with tax regulations while optimizing their tax saving.

Please feel free to reach out to Horizons Support if you have any further questions.