This summer’s two main sporting events are the European Football Championship in Germany and the Olympic Games in Paris. However, the prices and availability of such high-profile tickets for sporting events abroad and the other travel costs are often too high for those who want to follow these matches and competitions live. One solution to this problem, which is also important for employer branding, is that employers can offer free or discounted tickets or season tickets to their employees for events covered by the Act on Sports. However, do these rules apply to tickets for sporting events abroad, i.e. to the two events mentioned above? This is what our article takes a closer look at.
Who can give such benefits and to what extent?
According to the Act on Personal Income Tax, an employer or paying agent may provide tax-free tickets or season tickets for sporting events covered by the Act on Sports to the same individual up to the amount of the minimum wage per fiscal year. This is not new, but before 2019 there was no limit on the value of such tickets and season tickets that could be given to employees. The minimum wage as the upper limit was introduced in 2019. However, the tax exemption is subject to strict conditions.
What tickets to sporting events abroad can be given tax-free?
The fact that a particular match takes place abroad is not a problem in itself since the tax exemption can be applied to tickets for sporting events abroad as well. However, as stated in the NAV information published on 5 April, only the following benefits qualify for tax exemption under the HungarianAct on Personal Income Tax:
- Tickets to sporting events abroad concerning matches involving a Hungarian club team or the national team at a foreign venue, as the relevant Hungarian association or sports organisation is involved in organising them;
- Tickets for events which only have foreign participants but are organised in Hungary, since the relevant Hungarian association or sports organisation is involved in organising them;
- Tickets or season tickets for a series of events or a match of a series of events in a competition which is included in the calendar of the Hungarian association, involves a Hungarian individual or team, but the Hungarian participant may not reach the level (e.g. the final, semi-finals) for which the tickets were purchased in advance.
According to the NAV, an employer can legally provide tickets for the matches of the European Football Championship to be held in Germany in 2024 and the events of the Paris Olympics up to the 2024 minimum wage, i.e. up to HUF 266,800, tax-free. Any Olympics event can be attended since it is a single competition covering many sports. In other words, it is not possible to stipulate that only events in which a Hungarian competitor or team will be competing are eligible events for the public. Consequently, tax-free tickets can also be granted for Olympic sports events without Hungarian competitors and for the opening or closing ceremonies.
Further conditions for tax exemption
As shown by this information from the NAV, it is important that the employer or paying agent buys the tickets and has an invoice issued in their name. If the ticket is purchased by an individual, an invoice must be requested in the name of the employer or paying agent.
However, if – for any reason – the purchase of digital tickets can only be invoiced in the name of the individual, the reimbursement of the digital ticket is considered a reimbursement of expenses, not an employer or payer benefit, and therefore does not qualify for the tax exemption. If the employer reimburses the price of a ticket purchased in this way, the amount paid will be taxable as employment income for the individual and as other income if paid for by a paying agent.
It is also good to know that free tickets cannot be converted into cash, and that benefits given by the employer in excess of the minimum wage are taxable as wages. Paying travel or accommodation expenses incurred in connection with tickets for sporting events abroad is also considered employment income given the legal relationship between the parties, which is subject to 15% personal income tax, social contribution tax and other contributions. Please also note that when attending a match during a business trip, mixing business with pleasure, it is risky to treat travel or accommodation expenses as tax-free benefits.
If you have any questions regarding tickets for sporting events abroad or any other benefits given by the employer, our tax experts are here to help.
