NAV audits focus on employee share schemes

The tax authority has recently been paying increased attention to employee share schemes operated by international groups. Practical experience shows that targeted audits specifically examining the Hungarian tax and contribution implications of these incentives are becoming increasingly common, in many cases covering several previous years.

The main difficulty is that these compensation schemes are almost always administered by the foreign parent company, meaning that Hungarian subsidiaries often do not have the detailed data requested by NAV readily available. When the authority requests participant lists and precise payment documentation at short notice, local companies can find themselves at a disadvantage.

Moreover, the tax payment obligation often rests with the individual concerned – typically senior executives or key employees – so an administrative error can cause serious reputational damage and internal tension for the company.

Companies should therefore review their existing share schemes as soon as possible, before any potential audit.

If you have any questions regarding the above, please feel free to contact our expert colleague.