Employee securities benefit programme

Employee securities benefit programmes provide employees and senior officers benefits with favourable taxation and employers with an easily controllable means for securing employee commitment.

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Don't hesitate to contact us!

Sándor Hegedüs

Partner, Head of Tax Services

Phone+36 1 886 3700; +36 1 886 3701
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Why is it worth adopting the recognised employee securities benefit programme?

Employee securities benefit programmes provide employees and senior officers benefits with favourable taxation and employers with an easily controllable means for securing employee commitment.

To whom do we recommend this programme?

Since the programme does not pertain to shares only, it can be adopted by any type of company. Under the scheme, up to 1 million forints annually per employee can be allocated in pecuniary benefits to employees free or with favourable taxation!

How much can be saved by introducing an employee securities benefit programme?

Taxation of 1 million forints provided as a benefit Cost to employerGross benefitNet benefitNet payment ratio
Reward, bonus

1 000 000

778 210

509 728

50.97%

Under the recognised benefit programmeControlled capital market transaction1

1 000 000

1 000 000

840 000

84.00%

Exchange rate gain2

1 000 000

1 000 000

700 000

70.00%

Exchange rate gain3

1 000 000

1 000 000

840 000

84.00%

1 Assuming that the security covered by the security benefit program is not a privately issued security.

2 Assuming that the security is issued privately and the employee does not reach the cap on healthcare contribution payment.

3 Assuming that the security is issued privately and the employee reach the cap on healthcare with other incomes. 

Conditions for implementing the programme

  1. Development of detailed Programme Rules;
  2. Under the programme, only securities issued by the company or its related party and the associated rights can be obtained;
  3. The programme must be communicated comprehensively in writing to all employees and senior officers of the company and a copy of the information or other similar document announcing the programme provided to employees and senior officers must the sent to the tax authority until the 20th of the month following the starting date of the mandatory retention period;
  4. Senior officers may not represent more than 25 percent of the individuals participating in the programme in the given year;
  5. Senior executives may only acquire maximum 50 percent of the total nominal value of the securities available for allocation;
  6. Right of disposal and property rights for the securities may be exercised only after expiry of the mandatory retention period, i.e. after the second year subsequent to the allocation;
  7. Under the programme, no securities can be allocated to the director of accounting and supervisory board members of the company and the issuer or to family members of these persons;
  8. Eligibility for participation in the programme may not depend on the personal performance of the employee;
  9. Eligibility for the benefit does not relate in any manner to the personal performance of the employee or senior officer;
  10. Any tax obligation of the organizer of the programme arising from the termination of the related party relationship between the organizer of the programme and its related party concerned by the programme must be fulfilled by the related party concerned by the programme in respect of its own employees and senior officers. The data necessary for the fulfilment of these obligations must be provided by the organizer of the programme upon the termination of the related party relationship.

Why does it make sense to entrust us with the implementation of the recognised securities benefit programme?

  • Our qualified specialists help assess anticipated tax burdens and feasibility.
  • Following the decision to adopt the programme, we prepare customized materials for the employer detailing the complete programme procedure.
  • We prepare the Programme Rules with the individual requirements of the benefit provider in mind.
  • We hold an information session for employees participating in the programme, and prepare a summary of provisions affecting them.

If you have any question, please don't hesitate to contact our experts!

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