Have questions? Ask us!

Employing in Hungary

At a glance

Employment in Hungary

The Hungarian labour market is highly regulated and is governed by Act I of 2012 Labour code. Labour contracts govern employment contracts and protect employee rights. The private sector is expected to increase its share of  job creation. Unemployment rate in Hungary has reduced in comparison to pre-crisis level supported by the private sector.

Read more

Payroll & Tax in Hungary

Foreign companies operating in Hungary may face challenges in dealing with complexities of the Hungarian taxation system. Primary concerns for a foreign company that needs to comply with tax laws in Hungary are social security contribution, value added tax (VAT), corporate income tax, specific business tax (SBT), value added tax (VAT), and property tax.

Read more

Immigration / Work Permits in Hungary

Since Hungary is a member of the European Union (EU) as well as a party to the Schengen Treaty, differing rules and conditions apply to EU/EEA nationals compared to non-EU/EEA nationals. There are different types of work permits issued in Hungary which include individual work permit, collective work permit, individual work permit within a collective work permit.

Read more

Incorporation

There are seven types of business forms available for foreign companies in Hungary. Each of these forms of business structures have their own advantages and disadvantages.

  • General (unlimited) Partnership (Kkt)
  • Limited Partnership (Bt)
  • Limited Company (Kft)
  • Private Company limited by shares (Zrt)
  • Public Company limited by shares (Nyrt)
  • Branch Office
  • Commercial representative office
Read more

GEO Solutions or DIY Employment in Hungary?

Companies entering Hungary must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Hungarian Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Hungarian entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated company ready to run payroll and may be a costly option.  Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Hungary

Payroll Hungary
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
All levels of income 16%
Tax Returns Supplied

Yes

Corporate Tax Requirements

Employers must file monthly tax returns for tax computed and remitted.

Employers Social Security and statutory contributions

Foreign nationals are subject to Hungarian social security contributions only if:
• They are employed locally by a Hungarian employer
• They work in Hungary as employees of a non-Hungarian employer and are nationals of an EU member state

Employer must contribute 27% of gross monthly payroll in the form of social contribution tax. As of 1st of January 2014, Employers of non Hungarian citizens are exempt from paying social security contributions for such employees. While the minimum wage used for the calculations is 101,500 forints there is no maximum limit.

Minimum monthly wage is used to calculate social security contributions and also cover work injury benefits, sickness and maternity benefits and unemployment benefits.

Employees Social Security and statutory contributions

Employee contributions are 8.5% of covered monthly earnings. Since January 1 2014 resident non-citizens are exempt from paying contributions for up to 2 years. While the minimum wage used for the calculations is 101,500 forints there is no maximum limit.

Corporate Income Tax Rate

Corporate income tax rate is 19%. But a rate of 10% is applicable to the part of the tax base which does not exceed HUF 500 million.

Sales Tax

A foreign taxable person is eligible to recover Hungarian input VAT if the following conditions are met.
• The business does not have Hungarian residency
• The business does not have any taxable supplies in Hungary
o Tax exempt cross border transportation from/to third countries
o Tax exempt cross border passenger transportation
o Supplies for which the reverse charge mechanism applies
o Electronically provided supplies where the foreign taxable person opted for application of the special regime for non-established taxable persons supplying electronic services to non-taxable persons

The standard VAT rate is 27%. While the reduced VAT rates are 18% and 5%. It’s not necessary to appoint a Hungarian fiscal representative to claim a VAT refund based on Directive 2008/09/EC or the 13th Directive.

Withholding Tax

There is no withholding tax levied on dividends paid to foreign companies. However, dividends paid to a non-resident individual can be subject to withholding tax at 18% unless if the tax rate is reduced under a tax treaty.
Hungary does not levy withholding tax on interest paid to foreign companies. However, interest paid to a non-resident individual can be subject to withholding tax at 18% unless if the tax rate is reduced under a tax treaty.
There is no withholding tax levied on royalties paid to foreign companies. However, dividends paid to a non-resident individual can be subject to withholding tax at 18% unless if the tax rate is reduced under a tax treaty.
Hungary does not levy tax on branch profits.

Work Permits
Business Visas
Others
+1 877 457 7691
Chat Now
  • Twitter
  • Linkedin

Subscribe

to our monthly Global Mobility newsletter