TAXATION OF GIFTS AND OTHER BENEFITS

Gifts and benefits taxed as certain specified benefits

For gifts classified as certain specified benefits, the company is liable to pay 15% personal income tax and 13% social contribution tax on 1.18 times the gross value of the gift. In addition, they are recognized as a cost for the company in corporate tax.

1. Small-value gifts for employees

The employer may give a small-value gift up to three times a year, not exceeding 10% of the minimum wage per occasion, which may be a product, service, or a voucher redeemable for these. In 2025, this means a maximum of HUF 29,080 per occasion, three times a year.

If the employer has not used the three annual opportunities for small-value gifts during the year (e.g., for Women's Day flowers or Easter gifts), then at Christmas, these gifts can be treated as certain specified benefit, with record-keeping obligations.

A voucher can be given as a small-value gift with favourable taxation if, according to the PIT Act, it is clear for which product or service, or in which product or service category it can be used, and if it is non-refundable. According to the tax authority, the voucher must physically indicate the product (category) or service (category) for which it can be redeemed. For example, a book, clothing, or food voucher meets the requirements, but a shopping voucher issued by a hypermarket that can be used for any goods in the store does not. Similarly, a voucher issued by a shopping centre that can be redeemed in any store with different product ranges does not meet the requirements.

Small-value gifts can also be given to close relatives, which must also be recorded.

2. Gifts to business partners

It is very common for companies to give gifts to business partners in recognition of successful cooperation during the year, within the framework of business, official, or professional relationships related to their activities. Business gifts can be given to existing or future business partners, but not to individuals who have an employment or other legal relationship with the company in respect of that relationship.

Business gifts are taxable as certain specified benefits. The value of business gifts is not regulated by the PIT Act, so they can be given regardless of value and multiple times a year.

Business gifts may include products or services and vouchers that meet the conditions described in point 1, but not, for example, securities, gemstones, precious metals, or items made from these, jewellery, or coins, if it is clear that the benefit does not meet the requirements of proper legal practice.

Tax-exempt gifts

1. Sports and cultural tickets, passes

Tax exemption applies to tickets and passes provided free of charge or at a discount by the payer to the same private individual for sporting events, cultural services, and zoo entry (e.g., theatre, circus tickets, concert tickets) that meet the conditions specified in the Personal Income Tax Act, up to the amount of the minimum wage (up to HUF 290,800 in 2025).

The exemption applies to any payer who provides tickets or passes to an individual free of charge or at a discount; furthermore, an individual can be anyone: an employee, their close relative, or a business partner. The benefit must be examined in the context of the payer and the individual, and there is no obstacle for someone to receive such tax-exempt benefits from multiple sources. The payer must keep records of the tickets issued to individuals.

It is very important that the exemption does not apply if the payer provides the ticket or pass in the form of a voucher; therefore, tickets must always be purchased for the specific event.

Other personal payments made to employees, executive officers, contributing members, and close relatives of these persons are considered recognised expenses in corporate tax. Tickets and passes given to business partners on this basis are also recognized as costs.

2. Specified wine products

According to the PIT Act, it is tax-exempt to provide, directly from a licensed wine producer (as defined by the law on viticulture and winemaking), bottled wine products (e.g. wine, champagne, sparkling wine) with protected designation of origin or geographical indication, also defined by the law, if provided as:

• part of representation or non-representation hospitality, or
• as a business gift, or
• as a small-value gift.

The licensed wine producer means the winemaker or winery where the wine is produced. Wine products are not tax-exempt if purchased from traders, such as supermarkets or wine shops.

Another condition for exemption is that the provider must keep records from which the use and source of the product can be determined, i.e., that the seller meets the legal requirements.

The definition and content of certain specified benefits, including value limits, remain unchanged; the value of tax-exempt wine products is included in these limits.

This means that a small-value gift can be given three times a year as a certain specified benefit, not exceeding 10% of the minimum wage per occasion, with the value of the wine product being tax-exempt.

Wine products served and consumed on-site at a wine tasting organized at a licensed winery are also tax-exempt. The value of a gift package containing wine, sparkling wine, etc., given to participants at a wine dinner or tasting at a licensed winery is only tax-exempt if it does not exceed 25% of the minimum wage per person (HUF 72,700 in 2025).

Wine products that meet the conditions are recognized as recognised costs in corporate tax.

TAXATION OF BUSINESS, CHRISTMAS, AND YEAR-END EVENTS

Events can be held as representation or other entertainment events.

Although the costs of both types of events are subject to the same tax burden as certain specified benefits, it is important to distinguish between them. The difference lies in the conditions of the event. If the event is predominantly not for entertainment, then costs that are necessary for the event (e.g., room rental) are not included in the value of representation and are therefore not taxable.

Representation

In everyday language, almost every company event or hospitality for business partners is called representation. However, according to the PIT Act, an event is considered representation if it is organized:

• within the framework of a business, official, or professional event, or
• on the occasion of a state or church holiday.

Hospitality provided at events organized within the framework of business or official activities and related services (travel, accommodation, leisure programs) provided to external guests or business partners are considered representation and are taxed as certain specified benefits under Section 70 (4) of the PIT Act. If employees also participate in the business event, they are considered to be working there, so their travel and accommodation costs are not subject to tax.

Thus, a lunch or dinner consumed during a business meeting is considered representation. If the event has a dual purpose, i.e., it includes a professional part (business discussion) followed by an entertainment part (e.g., music evening), the costs of organizing the professional event (e.g., room rental, sound system) are not taxable. However, benefits satisfying personal needs (hospitality, entertainment, hotel) are taxed as certain specified benefits.

It is important to have documentation supporting the business or official nature of the event, as compliance with the definition can be determined based on this. Documentation should cover organization, destination, location and time, and the content of the actual professional program.

Hospitality and music programs provided at a Christmas party for employees are also considered representation, as Christmas is a church holiday.

Other entertainment events

Hospitality is not considered representation for personal income tax purposes if, based on the actual circumstances, the event is predominantly for leisure.

Thus, a Santa Claus party, year-end party, New Year's toast, Women's Day celebration, or family day is not considered representation.

In this case, all costs of the entertainment event, including those related to organization, entertainment, programs, and catering, are treated as certain specified benefits under Section 70 (6) b) of the PIT Act.

At events organized predominantly for hospitality or leisure for employees or business partners, a gift item may also be given, which is also considered a certain specified benefit, provided that the value of the gift does not exceed 25% of the minimum wage (HUF 77,200 in 2025). In this case, only a gift item can be given; a voucher is not considered a gift item.

For both representation and other entertainment events, the tax base for benefits taxed as certain specified benefits is 1.18 times the cost borne by the payer, on which 15% personal income tax and 13% social contribution tax must be paid.

These are recognized as costs for corporate tax purposes.

VALUE ADDED TAX ON GIFTS

In general, the VAT on gifts and food and drink related to hospitality cannot be deducted.