In Hungary the overall tax burden on employment income represents 44% of the total wage cost. Here are the most efficient ways to cut this tax bill.
Employee share can be granted to employees free from taxes and any dividend distributed on such shares enjoys a low taxation of 15% in the employees’ hands. This means a tax saving associated by a higher motivation of the employees arising from their owners’ status in the employing company. There exists various legal techniques to avoid, at the same time, the interference of the employees in the strategic decisions of the company.
ESOP can be best described as a “holding foundation”, owning shares in the employer in favour of the participating employees. Similar to employee shares, share grants through an ESOP enjoy tax exemption and employees may realise income at an overall 15% taxation. One of the advantages of ESOP, compared to employee shares, is that it may also be used to distribute proceeds of an exit in a tax efficient manner. Read more…