By virtue of the provisions of the Labour Code, the employer assumes the obligation, among other things, to refund the employee’s costs arising reasonably in connection with completing the employment tasks.
In order to fulfill the work obligation, employees must regularly get to their workplace from their residence. The detailed rules of travel cost refund are set forth in government decree 39/2010 (III.26.), and the taxation rules are laid down in the Act on Personal Income Tax.
In the application of the decree, travel to work means daily travel to work from outside the administrative boundaries as well as travel to and from the workplace and the residence at least once a week. The government decree also qualifies travels to work from within the administrative boundaries as travel to work if the employee cannot reach the workplace – due to its geographical location - either through local or regional community transport or the workplace can be reached by means of local community transport the route of which was established or modified expressly in order to reach the employer located in the external area of the settlement.
Cost refund is paid – under the title of daily travel to work – to employees for travelling to and from their residence or temporary residence and the workplace, as well as for regular or ad hoc travel, depending on the work order.
The government decree says that in order to claim travel cost refund the employees simultaneously have to declare their residence or temporary residence and whether they travel to work on a daily basis from their residence or temporary residence. Employees do not have to complete the declaration for each and every settlement of accounts, however, a new declaration must be made if there is any change to the data disclosed in their declaration.
Travel may cover means of public transport and motor vehicles.
Travel to work by means of public transport
Available means of public transport:
- 2nd class national, inland or cross-border public railway
- Scheduled, national, regional and suburban coach service
- Suburban railway (HÉV)
- Scheduled ship, boat, ferry
The employer shall refund at least 86% of the price of monthly pass or ticket purchased by the employees for travel to work at full price, purchased at a travel discount or reduced with a business policy allowance, and the monthly pass or single ticket must be accounted for. There is no upper limit to tax-free cost refund.
The refund obligation does not cover the refund of the price of cards giving title to use the allowance, it only covers the price of the ticket (monthly pass) purchased with the card because the private person may not use the card exclusively for travel to work.
A condition on tax-free cost refund is that the invoice issued to the employer’s name or the monthly pass/ticket must be submitted to the employer. The act on personal income tax does not make it obligatory but does not exclude it either that the employer requests the employee to submit both of them.
Subject to the employer’s decision, tax-free cost refund above 86% but at most 100% may also be made.
Tickets purchased for 1st class railway, Inter-City extra ticket and reserved place ticket or even a fast train extra ticket may be refunded without tax, but it is not obligatory.
It is not necessary to limit cost refund in the case of the monthly pass if the employee is also on holiday or sick leave in addition to the worked days in the given month, the full price of the monthly pass can be paid and no adjustment to the days spent in work is necessary.
However, no tax-free refund of the price of travel tickets is possible on the days when no work is done.
Transit travel by means of local public transport is also included in the category of travel to work. For example, if the employee lives in Gödöllő and works in Budaörs, 86% of the Budapest monthly pass must also be refunded to him/her free of tax as the employee uses the means of local transport only for transit.
If the same employee works in a Budapest district, the Budapest monthly pass cannot be refunded free of tax because s/he gets off the local means of transport within the area of Budapest.
Travel to work by motor vehicle
The government decree not only lays down the rules of travelling to work by means of public transport. Instead of at least 86% monthly pass or ticket refund, 9 forints / km is obligatorily payable to the employee as travel cost refund in the following cases:
- If the employee is physically handicapped,
- If the employee cannot use community transport, or only with a long waiting time, due to his/her work order,
- If there is no community transport between the employee’s residence or temporary residence and his/her workplace,
- If the employee has a child who receives infant care, or a child aged under 10 studying in a public educational institution.
Should the employee go to work by motor vehicle in the above cases, the employer shall refund – free of tax – the amount calculated for business days based on the to-and-from distance measured on public road.
Basically, this covers passenger car use but the relevant laws do not specify the type of motor vehicle that can be used, thus other transport vehicles (e.g. bicycle, motorcycle) cannot be excluded either. However, employees may also claim cost refund if they walk to work.
The vehicle does not have to be in the employee’s ownership either. It can also be owned by another person. It can also be rented or leased.
It may also happen that several employees jointly use a motor vehicle owned or leased by one of them, and in this case each employee may separately claim motor vehicle cost refund.
If the employee works at different places every day, the place of work must be recorded accurately for the given days in each case as cost is always refunded from the residence up to the place of current work performance.
Some employees do not live permanently at the settlement from where they go to work every day.
Travelling home means travelling to and from the workplace and the residence at most once a week, in the case of work schedule different from the general work order: at most four times a month.
According to the government decree, residence is the address of the place where the employee lives or stays permanently.
Permanent residence is the address of the place where the employee temporarily stays for work performance, without the intention to leave his/her residence definitively.
The circle of the means of public transport available for travelling home is extended as means of air transport may also be used in addition to the means of transport used for travelling to work.
When travelling home by means of public transport, at least 86% of the travel cost is obligatory to refund against accounting for the tickets.
When travelling home by motor vehicle, the employer shall refund HUF 9 / km based on the kilometres calculated between the temporary residence and the permanent residence. In this case, the fact of travelling home cannot be controlled.
The upper limit of refunding the cost of travelling home is announced in the Official Bulletin published as an attachment to the Hungarian Official Gazette. In 2019 this amount is HUF 37,200.
An employee may receive travel cost refund under both titles (daily travel to work and travelling home). For example, an employee who has temporary residence in Budapest, works in Dunakeszi and has his/her permanent residence in Szeged.