What are the rights and obligations of employees for their business trips? What is necessary for business trip settlement, and how are advances and refunds provided? What is the difference between domestic and foreign business trips?
This is what our series of Business trip legislation is about. The first part was dedicated to Slovak legislation, the second part described details of business trip legislation in the Czech Republic, for the third time we focused on legislation in Romania, the fourth article listed rules for business trips in Poland and our final analysis zooms in on Hungarian business trip regulations.
Duration of a business trip:
The number of calendar days during which a person is on a business trip is calculated from the day and time of departure to the day and time of the return of the means of transport to the place where the employee has a permanent residence or the place of work, whereby a distinction is made whether it is a business trip in Hungary or abroad. One day of a business trip in Hungary is considered a calendar day once it exceeds 6 hours, while if it is a business trip abroad, one day of a business trip is considered 24 hours. The remaining hours after a longer business trip abroad are considered as an additional day if it exceeds 8 hours.
Expenses related to vehicles that are used exclusively for economic activity are fully admissible, but the company has the obligation to keep a logbook of kilometres driven, which will justify that the car was used only for the purposes of economic activity. At the beginning of each trip, the employee must enter in the mileage report the number of kilometres travelled, which is displayed on the dashboard of the car, and represents the number of kilometres driven by the vehicle immediately before this trip.
At the end of each trip, the employee should once again enter the number of kilometres driven in the mileage report. The difference between these two numbers represents the number of kilometres the car travelled during the trip. The employee is entitled to reimbursement of amortization (if the car is owned by the employee or their direct relative), i.e. compensation for kilometres travelled and also the right to reimbursement of compensation for fuel. With the help of the average fuel consumption (which is determined by the legislation according to the type of vehicle and fuel), it is possible to subtract the approximate number of litres consumed by the car during driving and determine the value of PHM expenses.
The price of fuel for the calculation is the average price based on the documents submitted by the employee, but it must not be higher than the market price published by the tax authority. For the calculation, it is also possible to use the legally determined average price, which is published for each type of fuel every month. If the employee submits a document on the purchase of fuel from abroad with an amount in a foreign currency, the price is calculated at the rate of the National Bank of Hungary valid to the date of receipt of the fuel, or at the rate to the 15th day of the previous month of receipt of the fuel.
Meals by a domestic business trip:
During a domestic business trip, the employee is entitled to daily per diems that cover food and other small expenses. The amount of the daily allowance is gross HUF 500. The employer can choose between paying a flat-rate daily allowance, which is taxable as wages, or invoice-based costs. It is also possible to apply both. There are no limits on the amount of the contribution.
When reimbursing an invoice for meals (which was issued in the name of the employer) to an employee, the reimbursed amount must be taxed as a specific defined benefit (the basis of the taxes is the amount provided to the employee in the form of meals multiplied by 1.18 and only personal income tax of 15% and social contribution tax of 13% are due by the employer).
Meals by a foreign business trip:
The legislation does not determine the amount of foreign per diems for each country in which the trip takes place. The amount of the allowance is determined by the employer, but it should be noted that only 30% of the value of the meal allowance is not taxable, up to a maximum of EUR 15 per day.
In the case of travelling by plane or ship, it is necessary to expect an additional 1 hour before departure from Hungary and after arrival in Hungary. In other cases, the starting point of being sent abroad is the moment of crossing the border.
For external trips, no daily allowance is granted for periods of time not exceeding 8 hours, 100% of the value of the daily allowance is granted for more than 8 hours.
The conversion of foreign allowances can be determined in two ways, it is up to the employer which method to use:
- using the exchange rate of the National Bank of Hungary valid to the 15th day of the previous month of payment to the employee (i.e. to the 15th day of the previous month when the settlement is paid to the employee)
- using the average exchange rate of the National Bank of Hungary valid to the day the employee is paid (i.e. to the day preceding the day when the settlement is paid to the employee)
In previous years, it was recommended to use the first option. In the current period, however, it is up to the employer to decide whether to use the second option, which also meets the tax rules.
Compensation and settlement
These are compensations that the employer is obliged to provide to the employee which are incurred directly related to the work activities. They include:
- reimbursement of proven travel expenses (travel ticket, plane ticket, taxi, public transport ticket),
- incidental expenses (telephone fee, fax fee, internet fee, parking fee, highway fee, tunnel fee).
Advances for compensations:
To pay the advance in Hungarian currency, the consent of the employee is required. If he/she gives his/her consent, the employee will receive the equivalent of the advance payment in a foreign currency, calculated at the average exchange rate in relation to foreign currencies established by the National Bank of Hungary to the day of the advance payment or at the exchange rate valid to the 15th day of the previous month of the employee’s pay.
TULIP and business trips
Business trip management in TULIP is separated into 2 parts:
- business trip request (plan)
If the employer decides to send employee on a business trip, the employee must enter the business trip plan in TULIP with the details:
- place of departure for the business trip,
- place of work (country, city, company),
- duration of the business trip,
- type of transport,
- place of end of the business trip,
- the reason for the business trip,
- planned expenses,
- attachments, or other necessary information.
Business trip requests can be submitted by HR, the employee’s manager or another authorized person. In this section, the employee has the option to request an advance in HUF or a foreign currency. The duration for which the employee entered the trip is also automatically displayed in his/her attendance for the purpose of payroll processing.
After the plan has been approved by the competent persons and after the employee’s return from the business trip, the employee is obliged to fill out the business trip settlement. The settlement shows all the information that the employee entered in his/her plan with the possibility of editing this data according to reality.
The employee has 5 sections at his/her disposal:
- crossing borders,
- compensation for the use of a private vehicle.
The sixth, where there is no need to fill in anything, is the “billing result”.
TULIP automatically calculates meal reimbursements based on the time zone and border crossing, which the employee is required to indicate in the Border Crossing and Meals sections. If the employee passes through several countries, he/she has the option to fill in all the countries of transit during the business trip and the exact time of finishing the task or leaving the first destination. The employee is also obliged to indicate the free meals provided by the employer. Based on this, TULIP automatically reduces the amount of the meal allowance for the given day.
The employee has the option to enter all travel expenses in the Expenses section, indicating the date of the expense, the type of expense, the amount of the expense, in the case of payment by card, and the amount of the expense abroad in the domestic currency. Expenses paid by the employee with the company card are indicated in TULIP and the amount of these expenses is subsequently deducted from the total result of the statement. All conversions to the domestic currency are calculated automatically.
If the employee used a private vehicle, TULIP automatically calculates mileage reimbursements based on the applicable reimbursement per 1 km for the given year. The employee can decide whether to use the price for consumed fuel according to the decree or to use the price from the receipt for the purchase of fuel. TULIP automatically recalculates the total compensation for fuel consumed.
The employee sees the result of the settlement immediately after entering all the information in his/her settlement and can change it until the settlement is sent for approval and processing. All participants in the workflow have the opportunity to download the business trip form.
Do you want to see TULIP’s business trip module? Plan a meeting with us:
Soon, we will publish other countries’ legislation of business trips. Are you interested? Submit for newsletter delivery or follow our social media where we will share new content.
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