Taxes and payrolls: the labour market in Hungary
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the labour market in Hungary.
Even if the national currency is the Forint(HUF), the whole article is in EUR to compare easily across countries and exchange rates
General data about the Hungarian labour market
| Minimum wage | 607.33€ for unskilled labor and 775.20€ for skilled labour |
| Payment basis | Monthly |
| Payment | Must be paid by the 10th day of the following month |
| Maximum working hours a week | 40 hours |
| Maximum overtime hours a week | 32 hours |
| Working hours compensation | Extra hours on weekdays are paid at 150% of the employee’s basic salary rate. Extra hours on weekends and public holidays are paid at 200% of the employee’s basic salary rate |
Payroll taxes in Hungary
Social Security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Social Contribution Tax | 13% | |
| Health Care Contribution | 7% | |
| Pension Fund | 10% | |
| Unemployment Fund | 1.5% | |
| Total | 13% | 18.5% |
Once contributions are paid, employees need to pay a flat income tax (not applicable to employees under the age of 25) of 15%.
Contingencies from self-employees
- 9% entrepreneur personal income tax
- 15% dividend tax
- 18.5% social security contribution
- 13% social contribution tax
- 2% local business tax
Taxes are paid based on the income: revenue minus expenses. Regardless of the revenue, every month self-employees must pay social security contributions and social contribution tax at least after the minimum wage or the guaranteed minimum salary.
Example of net salary in Hungary
As a reference, we use the average salary of a software engineer. In Hungary, on average, senior software engineers earn annually 38,300€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 38,300 | |||
| 13% | 4,979 | |||
| 7% | 2,681 | |||
| 10% | 3,830 | |||
| 1.5% | 574.5 | |||
| Total | 13% | 4,979 | 18.5% | 7,085.5 |
| Income tax | 15% | 4,682.18 | ||
| Net salary (annually) | 26,532.32 |
The employer contributes 4,979€ to social security and the employee 7,085.5€.
After paying the income tax, the employee has a net salary of 26,532.32€ coming from a gross salary of 38,300€.
Unemployment regulation in Hungary
After the employment relationship is terminated by notice, the employee must receive their final salary payment within five working days of the termination.
| Time worked | Notice period |
| Less than 3 years | 30 days |
| 3 to 5 years | 35 days |
| 5 to 8 years | 45 days |
| 8 to 10 years | 50 days |
| 10 to 15 years | 55 days |
| 15 to 18 years | 60 days |
| 18 to 20 years | 70 days |
| More than 20 years | 90 days |
If the employer terminates employment due to operational reasons, employees have the right to receive severance pay. The amount of severance pay ranges from a minimum of one month’s salary to a maximum of six months, depending on the terms specified in the employment contract.
In Hungary, the probationary period is limited to a maximum of three months by law. If the agreed-upon probationary period is less than three months, the parties may extend it once for a maximum of three months in total.
Different kinds of leaves in Hungary
Paid vacation days go from 20 to 30, depending on the employee’s age. Employees with children under 16 years are entitled to extra vacation days: two for one child, four for two children and seven for three or more. Two extra days if the child is disabled.
There are 11 public holidays.
the employer should pay 70% of the salary to employees on their first 15 days of sick leave. After that, for the following year, the National Health Insurance Fund will pay 33.33% of the salary.
Paid parental leave
Upon the birth of his child, a father shall be entitled to five extra vacation days, or seven days in the case of twins, until the end of the second month from the date of birth.
Mothers are eligible for the Pregnancy and Confinement Benefit (CSED) for the first six months, which amounts to 70.00% of their salary. Following that, for the next eighteen months, until the child turns two, mothers can receive the Child Care Fee (Gyermekgondozási díj – GYED), which also amounts to 70.00% of their salary, with a cap of twice the minimum wage.
In addition, parents or grandparents who are caring for a child up to three years old can receive the Child Home Care Allowance (Gyermekgondozási segély – GYES) benefit. All of these benefits are administered by the National Health Insurance Fund of Hungary (NEAK).
Women have 24 weeks of maternity leave but can take up to three years of leave and receive maternity benefits.
After the maternity leave period, one parent can take parental leave until the child reaches the age of 2 years old. This leave is paid at 70.00% but is capped at double the minimum daily wage.
Other common Hungarian benefits
| Benefit | % of companies with this benefit |
| Mobile phone | 15.3 |
| Health insurance | 14.3 |
| Casual dress code | 13 |
| Professional development | 11.9 |
| Free parking | 11.5 |
How to employ a Hungarian worker
Employees need to get a visa (valid for a year), a work permit (valid for two years) or a residence permit (valid for up to 3 years).
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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