Employee securities benefit programme

In this brochure we would like to recommend a securities benefit programme to our clients. Under the employee security benefit package, employers may provide employees securities (quota, shares) or rights (options, subscription rights) relating to securities under favourable tax conditions.

Why is it worth adopting the recognised employee securities benefit programme?

Employee securities benefit programmes provide employees benefits with favourable taxation and employers with an easily controllable means for securing employee commitment.

To whom do we recommend this programme?

Since the programme does not pertain to shares only, it can be adopted by any type of company. Under the scheme, up to 1 million forints annually per employee can be allocated in pecuniary benefits to employees free or with favourable taxation.

¹ Assuming that the employee's annual income inclusive of the reward remains below HUF 2 424 000. 
² Assuming that the employee's annual income exclusive of the reward exceeds HUF 2 424 000, however, does not reach the cap on pension contribution payment obligation. 
³ Assuming that the employee has reached the cap on pension contribution payment obligation.
⁴ Assuming that the employee does not reach the cap on contribution payment obligation.
⁵ Assuming that the employee reaches the cap on contribution payment obligation considering his other incomes.

Conditions for implementing the programme

1. Development of detailed Programme Rules.
2. Registration of the programme by the President of National Tax and Customs Administration.
3. Under the programme, only securities issued by the company or its affiliate and the associated rights can be obtained.
4. At least 10% of the employees must indicate their intent to participate, and no more than 25% of them may hold senior executive positions.
5. Senior executives may only acquire maximum 50% of the total nominal value of the securities available for allocation.
6. Right of disposal and property rights for the securities may be exercised only after expiry of the mandatory retention period, i.e. after the second year subsequent to the allocation.
7. Under the programme, no securities can be allocated to the director of accounting and its family members, or the family members of the company's auditor and of the supervisory board members.
8. disclosed financial statements with an auditor’s clause for at least the three business years preceding the submission of the request for the registration of the program,
9. a bankruptcy or liquidation procedure was not initiated in the year of submission of the request for the registration of the program and in the three preceding years.

Why does it make sense to entrust us with the implementation of the recognised securities benefit programme?

1. Introduction of the programme is conditional on the submission of an application to the President of the National Tax and Customs Administration countersigned by the tax advisor or by an attorney-at-law..
2. Our qualified specialists help assess anticipated tax burdens and feasibility.
3. Following the decision to adopt the programme, we prepare customized materials for the employer detailing the complete programme procedure.
4. We prepare the Programme Rules with the individual requirements of the benefit provider in mind.
5. We hold an information session for employees participating in the programme, and prepare a summary of provisions affecting them.
6. We act on our Client’s behalf throughout the registration procedure.
7. Our qualified experts will perform the audit prescribed as a condition for the registration of the program.