Employees are entitled to compensation from their employers for commuting from another town or city. Due to the significant increase in fuel prices, the corresponding thresholds have been doubled by the end of the ‘state of emergency’ in effect (end of June 2023, for now).
According to the provisions of the Hungarian Labour Code, the employer is obliged to reimburse the employee for the necessary and justified costs incurred in the performance of the employment relationship.
Such justified costs include, for example, the employee's travel expenses to and from work. If the term "commuting to work" as defined in the relevant Government Decree on the reimbursement of travel expenses in connection with commuting to work ("Decree") includes the employee's commuting to work, i.e. inter alia, the place of work and the place of residence are not located within the same municipality, the employer reimburses the cost of the pass or ticket for the employee's commuting to work at the rate specified in the Decree, provided that the additional conditions set out in the Decree are met.
Additionally, if the employee travels to the place of work by private car and if the conditions laid down in the Decree are met – for example, there is no public transport available or if the employee has a child in day-care or in a public education establishment under the age of ten – the employer is required to reimburse a minimum amount to the employee and is free to supplement this amount under the given threshold tax-free based on the actual distance from the place of work.
In accordance with the Personal Income Tax Act and the new legislation on the threshold, the corresponding amounts are:
- 18 HUF/km as minimum reimbursement to be paid by the employers (60% of the threshold);
- up to 30 HUF/km supplementary, tax-free compensation limit to 15 HUF/km (subject to the discretion of the employer).
Employers are entitled to apply the increased threshold from January 2023 and are required to do so from February, with regard to the minimum reimbursement respectively. Both increased amounts are formally applicable by the end of the ‘state of emergency’ – end of June 2023 – that might be prolonged or implemented in the regular legislation afterwards.
Furthermore, the benefit applies in particular, but not exclusively, to commuting to work by private car, i.e. the employer is entitled to provide a tax-free kilometre-based contribution for employees travelling to work by bicycle, scooter or other vehicles up to the above amount.