We have covered how family inclusion works – this article goes into the financial back office: what should happen to the family premium in the books? Two routes exist, and the choice matters.
The starting point
The family member’s premium is typically not a recognised corporate tax cost – the family member is neither an employee nor an executive officer (CIT article). The question: how does the company handle this compliantly?
Solution A: the company pays and increases its tax base
The company absorbs the family premium and raises its CIT base by the unrecognised cost. Example: if the family premium does not qualify as a recognised cost – for instance for a non-close relative (a cohabiting partner) – then at HUF 120,000 annual premium the base increase carries a CIT effect of HUF 10,800 at 9% – plus the premium’s PIT-social burden; the premium of a close relative (spouse, child) is typically a recognised cost under Annex 3, Part B, point 3 of the Corporate Tax Act. Viable, but a double load: the company bears the premium AND the correction, with administration.
Solution B: the employee reimburses (the market standard)
The colleague reimburses the family share – typically via monthly payroll deduction under a written declaration. For the company the item is pass-through, no CIT question arises, and the colleague still typically obtains family cover on more favourable terms than with an individual policy. For payroll it is a one-time setup, automatic thereafter.
Why would anyone still choose A?
In owner-executive circles at small headcounts, companies sometimes deliberately absorb the family premium as a gesture – there the double load is a known, accepted price. The point is deliberateness: choosing between the two routes should be a decision, not an accident. During contract preparation we show the financial effect of both.
Illustrative calculation, not tax advice – fix the exact treatment with your accountant, in a written internal policy.
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