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6/4/2020  
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INCLUSION POLICIES
Social benefits

Hungary faces EU Court lawsuit over luncheon voucher monopoly

According to the Hungarys goverment meal voucher system, which is a typical part of many employee benefit programs, has been changed to fund social programs.

The European Commission has progressed one of the ongoing infringement procedures against Hungary to the European Court of Justice - specifically, the one dealing with holiday and luncheon vouchers as in-kind employee benefits.
Redacción 22/4/2014 Send to a friend
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In 2011, Hungary amended its legislation on the issue of vouchers formeals (hot and cold), leisure and holidays, granted by employers to their employees, and considered as benefits in kind and therefore subject to more favourable tax and social security rules.

These food vouchers  generated a lot of revenue for for-profit companies in the past (some of them foreign companies), but under the new system, the Erzsébet program, if the employer decides to give the state-owned vouchers to employees as part of their compensation, the profit from the vouchers remains with the state-owned National Recreational Foundation.The government encourages employers to offer the vouchers as part of employee benefit plans by offering tax incentives.

This new legislation has created a monopoly for a public foundation responsible for issuing cold-meal vouchers (paper or electronic) and hot-meal vouchers (paper), granted by employers to their employees. Furthermore, it establishes very strict conditions for the issue of vouchers for hot meals, leisure and holidays, considered as benefits in kind.

This new legislation means that operators present on the hot and cold meal vouchers market for several years are now excluded from the market for vouchers considered as benefits in kind, entry for new operators is made more difficult and the free provision of services is impossible. The allocation of the income of this new monopoly to social expenditure cannot be a valid reason justifying the restrictions in place.

In June, the European Commission shifted the infringement procedure on this law to the European Court because the Commission believes the change in the regulation limits the free market. Now it is up to the European Court to decide whether the new system is discriminatory and how the legislation should be changed. Needless to say, the government believes the European Commission is mistaken. Not least because of the way that these meal voucher programs are built up: they are encouraged by tax exemptions, so in a way, the government creates the market for them. It seems only fair that the proceeds from this very particular voucher market created by the government should be directed toward supporting government programs.

The three French companies formerly active in Hungary´s luncheon voucher market for many years (Edenred, Le Cheque Déjeuner and Sodexo) were driven out of the market once the current regulatorty environment was put in place.

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