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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
Hungary map

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Mercans offers complete payroll, PEO and HR services in Hungary

Hungary remains an important business location in Central Europe thanks to its strategic position, manufacturing base, skilled workforce and integration into EU supply chains. Key industries include automotive, electronics, pharmaceuticals, shared services, logistics and food processing. The country continues to attract foreign investment with competitive corporate taxation and a strong export orientation.

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Doing Business in Hungary

Hungary offers a developed industrial base, strong infrastructure and access to the EU single market. Companies benefit from a predictable corporate tax system and a well-established manufacturing and services ecosystem, although employers should carefully assess local labor, tax and immigration compliance requirements.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Hungary is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.

Banking

Banking Hours: 8:00 am to 4:00 pm from Monday to Friday.

Working Week

The standard full-time working week is generally 40 hours, usually from Monday to Friday.

Labor Law

Employment relationships in Hungary are mainly governed by the Labour Code. Employers must comply with rules on contracts, working time, leave, minimum wage, wage supplements, dismissal and employee information obligations, while specific immigration rules apply to third-country nationals.

Main Industries

Automotive, electronics, pharmaceuticals, food processing, logistics, machinery and shared services

GDP Growth

2.0%

Dates & Numbers

yyyy-mm-dd

Official State Name

Hungary

Population

9.5 million

Capital

Budapest

Major Languages

Hungarian

Currency

Hungarian Forint (HUF)

Internet Domain

.hu

International Dialing Code

+36

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Hungary
Budapest, HU
4:33 pm, May 5, 2026
26°C
clear sky
26 %
Wind Gust: 0 mph
Clouds: 0%
Sunrise: 5:21 am
Sunset: 7:59 pm

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Payroll

Payroll in Hungary requires employers to manage wage tax withholding, social security deductions, reporting obligations and compliance with the minimum wage framework. Hungary applies both a general minimum wage and a guaranteed wage minimum for jobs requiring at least secondary education or vocational qualifications.

It is acceptable to provide employees with online payslips, provided legal recordkeeping requirements are met.

Payslip

Payroll reports should generally be retained in line with tax and employment recordkeeping rules.

Reports

Employees are entitled to 20 working days of paid annual leave, with additional days based on age and other circumstances.

Annual Leave

Employees are entitled to 15 working days of sick leave per calendar year, generally paid at 70% of absence pay.

Sick Leave

Mothers are entitled to 24 weeks of maternity leave and fathers are entitled to 10 working days of paternity leave.

Maternity & Paternity Leave

Notice periods generally start at 30 days and may increase with the employee’s length of service.

Employee Termination

There is no statutory 13th month salary, but employers may provide bonuses by contract or policy.

13th month salary

322,800 HUF gross per month

Minimum Wage

Overtime and work on rest days or public holidays are subject to statutory wage supplements, with specific rates depending on the type of extra work.

Overtime

There is no universal statutory severance for all terminations, but severance may apply in qualifying employer-initiated cases depending on length of service.

Severance Pay

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Tax and Social Security

Hungary taxes employment income under a relatively simple payroll tax framework. Employees are generally subject to flat-rate personal income tax and social security contributions, while employers remain responsible for withholding, reporting and remitting payroll liabilities.

Tax

Hungary applies a flat 15% personal income tax rate. The standard corporate income tax rate remains 9%, one of the lowest in the EU, and the standard VAT rate is 27%.

9%

Corporate Income Tax

15%

Personal Income Tax

27%

Sales Tax

27%

VAT

Social Security

Employees generally pay an 18.5% social security contribution through payroll. Employers also bear payroll-related contribution and labor cost obligations depending on the applicable statutory framework and tax category.

Varies

Social Security Rate

Varies

Social Security Rate for Employers

18.5%

Social Security Rate for Employees

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Employment Law

Hungarian employment law sets mandatory minimum standards for contracts, working time, leave, wages, equal treatment and termination. Collective agreements and internal policies may also shape certain terms, provided they remain within the legal framework.

Employment Agreement

Employment contracts should generally be concluded in writing and must include the employee’s basic salary, position and place of work, together with other information required by law.

Working condition

As a general rule, full-time working time is 8 hours per day and 40 hours per week. Working time schedules, overtime and rest periods are regulated by the Labour Code.

Leaves

Employees are entitled to statutory annual leave, sick leave and several family-related leaves. Public holidays are established by law and employees are generally not required to work on those days, subject to sector-specific exceptions.

Employment termination

Employment may be terminated by mutual agreement, notice or immediate effect under the conditions set by law. Notice, severance and procedural requirements depend on the ground for termination and the employee’s service length.

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30 days

Minimum notice period for terminating an employee

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11 days

Total number of public holidays

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40

Working hours per week

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2 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Third-country nationals who intend to work in Hungary generally require the appropriate employment-related residence authorization. Applications are typically submitted through the Enter Hungary system or the competent authority, depending on the applicant’s location and status.

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Residency permits

Hungary provides several residence routes for employment, including the residence permit for the purpose of employment and other work-related categories under the current immigration framework. Permit availability and conditions depend on the worker’s nationality, role and employer circumstances.

Work Permit validity

Up to 3 years for the residence permit for the purpose of employment

Required Documents

Valid passport or travel document

Application submitted through the appropriate immigration channel

Employment contract or valid job offer in Hungary

Proof of accommodation in Hungary where required

Proof of subsistence and financial means where required

Health insurance or evidence of healthcare coverage where required

Documents proving the purpose of stay and employer information

Compliant, reliable, error-free and touchless payroll in Hungary

Build the best team and hire top talent compliantly in Hungary. Get in touch with Hungary payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Hungary and how does it work for foreign companies?

    An Employer of Record in Hungary acts as the official employer of staff on behalf of a foreign company. It handles employment contracts, payroll, taxes, social contributions and compliance with Hungarian labour law, while the foreign business manages the employee’s day-to-day work.

    Why should businesses use an EOR instead of establishing a legal entity in Hungary?

    Using an EOR allows businesses to hire in Hungary quickly without the time, cost and setup of forming a local entity. It reduces administrative burden, accelerates market entry and ensures compliance with local employment, tax and social security regulations.

    How does payroll outsourcing in Hungary ensure compliance with tax and labor regulations?

    Outsourcing payroll in Hungary means the provider ensures correct salary calculations, withholding of income tax, employer contributions, payslip issuance and statutory filings in line with Hungarian law. This reduces the risk of penalties or legal exposure due to incorrect employment practices.

    Can an Employer of Record in Hungary hire employees and manage work permits for international companies?

    Yes. An EOR in Hungary can recruit and employ staff on behalf of a foreign company and assist with necessary immigration processes, such as work and residence permits for non-Hungarian nationals, while managing HR and payroll functions.

    What are the main benefits of using EOR and payroll services in Hungary for global expansion?

    The main benefits include rapid access to the Hungarian workforce without forming a local entity, full compliance with labour and tax obligations, reduced legal and administrative risk, access to local HR expertise and the flexibility to scale operations while focusing on core business activities.

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