Many companies look after their colleagues' health without taking out insurance: once a year they book a screening day at a local private clinic, pay for the managing director's executive health check, or decide case by case to cover the bill for a colleague's MRI scan. In our work as brokers, we see that these arrangements are made with good intentions, but their tax treatment varies from case to case – the same service can be tax-free, can be a benefit carrying 33.04% public charges, or can be income taxed as wages. The difference is decided not by the content of the examination but by the legal title and the way it is organised. In this article we go through the three categories and look at how care provided through insurance differs.
- Under the Personal Income Tax Act (Szja tv.), occupational health care (Annex 1, point 8.6 d)) and vaccination and epidemiological screening provided by the payer (point 8.39) are tax-free – a general screening package does not belong here.
- Screening given to all employees on the same terms or under an internal policy can be a certain specified benefit under Section 70 of the Szja tv., with 33.04% public charges borne by the company.
- Paying the medical bill of an individually selected employee is income from employment: the employee pays personal income tax and contributions on it, and the company pays social contribution tax.
What is genuinely tax-free: occupational health care
The tax-free benefits are listed in Annex 1 to Act CXVII of 1995 on Personal Income Tax (Szja tv.). According to the summary in Forvis Mazars's 2024 legal newsletter, point 8.6 d) of the Annex names occupational health care as a tax-free benefit: this includes the fitness-for-work examination and the services of the occupational physician, regulated by Government Decree 89/1995 on the occupational health service and NM Decree 33/1998 on the medical examination of fitness for work. There is no upper limit on this cost, and the change of 1 September 2024 did not undermine this either: since the amendment of Act XCIII of 1993 on Occupational Safety and Health and of the Labour Code, the fitness examination is compulsory only in cases specified by law or where the employer orders it, but according to the newsletter the tax exemption can be expected to remain even for an examination the employer orders voluntarily, because it is still occupational health care. The line is drawn elsewhere: the same source points out that other company health insurance policies and the screening packages provided under them do not qualify as occupational health care, so the tax exemption does not apply to them. The occupational physician is therefore not a cheaper substitute for insurance but a compulsory minimum with a different purpose – we wrote about this in detail in our article on the difference between the occupational physician and company health insurance.
Vaccination and epidemiological screening: the narrow exceptions
Two further health-related items appear on the tax-free list, in point 8.39 of the Annex. According to the tax summary of the Fejér County Chamber of Commerce and Industry, vaccination provided by the payer and epidemiological screening are tax-free, and, according to the summary, the glasses to which employees are entitled by law for screen work and health-protection items – tests, masks, disinfectants – are not taxable either. Here the word is easy to misunderstand: in the wording of the Annex, “screening” (szűrővizsgálat) means an examination for epidemiological purposes, not a laboratory package, cardiac screening or cancer screening. Organising flu vaccination is therefore a tax-free benefit, whereas an autumn health day with blood tests and ultrasound is not. It is worth handling the two separately towards the accounts as well, on separate invoices and under separate legal titles, so that the tax-free and the taxable parts do not get mixed up.
A voluntary screening package for everyone: a certain specified benefit – if it is organised properly
If the company orders screening for its employees on an invoice issued in its own name, the benefit is taxable; the only question is in which category. Under Section 70 of the Szja tv., a certain specified benefit (egyes meghatározott juttatás) is a product or service that the employer gives to all its employees on the same terms and in the same way, or that it provides to several employees under an internal policy accessible to every employee, defining the group of those entitled not individually but by job, position, age or another common criterion independent of performance. The Act places in the same category the case where several employees are entitled to a service at the same time and the company, despite acting in good faith, cannot establish who used how much – a common situation at an on-site health day. The public charges on a certain specified benefit stay with the company: 15% personal income tax and 13% social contribution tax on 1.18 times the value of the benefit, 33.04% in total – the same rate at which the premium of group health insurance is taxed when the part of the premium attributable to the insured person cannot be determined even by apportionment (Szja tv. Section 3 point 89 b), Section 70 (6) b)); otherwise, the part of the premium attributable to the individual is the employee's income from their employment relationship – we set out the calculation in our article on taxation. The conditions of the category are worth taking literally: if screening “for everyone” is in practice accessible only to office staff and not to shift workers, or if executive screening is allocated by individual decision rather than by a policy, NAV (the Hungarian tax authority) may classify it as wage income in an audit. We have collected what else fits into this category in our piece on certain specified benefits.
An invoice in the employee's name: wage income
The third case is the most expensive, and in our work as brokers this is the one we see mishandled most often. If the company pays the medical bill of a colleague selected by name – whether directly to the clinic or by reimbursing an invoice issued in the employee's own name – the benefit is income provided in view of the employment relationship, taxed as wages as part of the consolidated tax base. The employee bears 15% personal income tax and an 18.5% social security contribution, the company 13% social contribution tax; since the benefit is not provided in cash, the employee's charges have to be deducted from their monthly cash pay, which can be an unpleasant surprise for the colleague. The same logic applies to a private clinic package paid “as a reward” and to treatment costs taken over as an individual act of goodwill. Our article on the collective umbrella shows how large the difference between the two tax burdens is; the point is that a health benefit taxed as wages costs the company considerably more than the same care provided as a well-structured benefit. It is worth clarifying the tax treatment of a goodwill case with the accountant in advance – afterwards there is no room for manoeuvre.
One-off invoices or insurance: what speaks for an orderly arrangement?
We are not claiming that insurance is better for every company than direct financing: at a three-person company, a once-a-year screening day can also be settled by invoice if the legal title and the documentation are in order. The difference lies in predictability and risk. With group health insurance, the tax category is decided when the contract is concluded – the part of the premium proportionately attributable to the insured person is the employee's income from their employment relationship, and it is a certain specified benefit only if the premium attributable to the individual cannot be determined even by apportionment (Szja tv. Section 3 point 89 b), Section 70 (6) b)), as we described in our article on the three categories of the NAV guidance – and during the year there is no need to weigh, case by case, which box a given examination falls into. The insurer pays only for what is an insured event under the contract, but the employee uses the services within the scheme through the service organiser, and the invoice does not land at the company: the employer is not put in the position of deciding, on the basis of individual medical bills, whom it pays for what. From a data-protection point of view it also matters that with the direct-invoice solution test results and diagnoses easily end up on the company's desk, whereas in the insurance arrangement they are handled by the insurer and the service organiser. For care ordered on invoice, VAT is typically not an issue – human healthcare services are exempt under Section 85 of the VAT Act (Áfa tv.) – and for corporate tax, a personnel-related payment taxed under the personal income tax rules is typically an allowable expense; in an individual case this is for the accountant to assess. Our checklist on the annual screening programme covers the practical side of organising screening.
What should you do if your company currently pays for care by invoice?
As a first step, it is worth separating the items: whatever is occupational health care, vaccination or epidemiological screening is tax-free and should stay on a separate invoice. Anything beyond that requires either a programme covering all employees on the same terms or a written internal policy defining the group of those entitled by an objective criterion – this is worth setting down together with the accountant before the next screening day is ordered. Individual invoice payments for named employees are best treated as wages, and the employee should be informed about the deduction in advance. If the company regularly spends on health care for several colleagues, it is worth comparing the direct-invoice solution with a group contract: not because that is automatically cheaper, but because the tax category, the documentation and data handling are settled in a single contract. If you let us know, we gather the insurers' offers and the policy conditions for the comparison; the final assessment of the tax treatment, however, is the task of the accountant and the tax adviser.
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Sources
- Act CXVII of 1995 on Personal Income Tax (Szja tv.) – Annex 1, Section 70
- Forvis Mazars: Abolition of the compulsory fitness-for-work medical examination and its taxation from September 2024
- Fejér County Chamber of Commerce and Industry (Fejér Vármegyei Kereskedelmi és Iparkamara): Workplace health promotion in taxation (Terézia Bárány, 2022)
- Act XCIII of 1993 on Occupational Safety and Health (Mvt.)
- Act CXXVII of 2007 on Value Added Tax – Section 85
- CIG Pannónia – Tax information for business companies (2 January 2024) – Szja tv. Section 3 point 89(b), Section 70(6)(b): apportioning the group premium
