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Mercans offers complete payroll, PEO and HR services in Hungary

With the country’s shift towards R&D and innovation, Hungary considers automotive as a core industry alongside electronics, ICT, pharmaceuticals and medical technology. With its strategic location at the crossroads of three major European transport corridors and its high quality infrastructure, Hungary is a preferred location for shared services centers.

Doing Business in Hungary

One of the most attractive advantages of Hungary is the wide availability of government incentives including investment cash subsidies, development tax incentives and tax incentives. However, regional economic competitiveness has declined in recent years with identified qualified labor shortage as a key factor. Some foreign companies have also expressed disappointment with the unpredictability of the tax regime and the volume of legal and tax changes.

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 6:00 pm from Monday to Friday.

Working Week

The standard working week is from Monday to Friday from 9:00 am - 3:00 pm.

Labor Law

Hungary is attractive for its investor-friendly legal environment and has harmonized its legal system with European law.

Main Industries

Mining, metallurgy, construction materials, food processing, electronics, textiles

GDP Growth

2.1%

Dates & Numbers

yyyy.mm.dd.

Official State Name

Republic of Hungary

Population

9.73 million

Capital

Budapest

Major Languages

Hungarian

Currency

Forint

Internet Domain

.hu

International Dialing Code

+36

Hungary
Budapest, HU
7:19 am, February 9, 2023
-4°C
clear sky

Payroll

The nominal increase, in 2022, of almost 20% makes Hungary’s minimum wage increase the highest in the EU, both in terms of gross value and purchasing power. An employee’s salary may be fixed (time related), performance related or a combination of the two.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 7 years

Reports

Employees are entitled to receive paid annual leave of 20 days

Annual Leave

Employees are entitled to receive paid sick leave of 15 days

Sick Leave

Employees are entitled to 24 weeks to 3 years of paid maternity leave and 5 days of paid paternity leave

Maternity & Paternity Leave

Notice of between 30-90 days must be provided to terminate an employment relationship

Employee Termination

There are no provisions mandated by law regarding the 13th month salary

13th month salary

542 EUR per month

Minimum Wage

Overtime payment is calculated at the rate of 1.5x the employee's ordinary rate of pay for weekdays and 2x for weekends

Overtime

Severance pay is provided for employees who are paid monthly and is dependent on the stipulations in the employment contract.

Severance Pay

Tax and Social Security

Personal income tax is assessed on both domestic-source income and foreign-source income provided the individual is resident in Hungary. Significant changes relating to corporate income tax, personal income tax and related contributions have been introduced in the tax system. The Hungarian health insurance system provides accident benefit coverage to insured persons.

Tax

Hungary maintains an attractive income tax regime and is a favorable holding location for company groups.

9%

Corporate Income Tax

15%

Personal Income Tax

27%

Sales Tax

27%

VAT

Social Security

Employers may apply for several social tax allowances depending on the classes of individuals being hired. Social security rights include family benefits, health insurance and long-term care, incapacity, old age benefits, social assistance, unemployment and more.

35.5%

Social Security Rate

17%

Social Security Rate for Employers

18%

Social Security Rate for Employees

Employment Law

The primary source of labor law is Act 1 of 2012 on the Labor Code. There are three levels of labor law on which the employment relationship may be governed: the Labor Code, collective bargaining agreements and the individual’s employment contract.

Employment Agreement

Such agreements must be concluded in writing, with clear clauses on the individual’s base salary, position, place of work and more. Unless it is otherwise agreed, the employment period is indefinite. A probationary period may be agreed upon between the employer and employee.

Working condition

Despite the statutory limitations, the employer may agree with the employee on a shorter weekly working time. Overtime is classified as extraordinary work in which total working time cannot exceed 12 hours per day and 48 hours per week.

Leaves

Work cannot generally be scheduled on a Sunday. Employees are entitled to take annual vacation days which may be interrupted for exceptionally important business reasons. However, annual leave must be provided in a way that an employee can take at least 14 uninterrupted calendar days at a time.

Employment termination

Termination of employment may be done by notice or mutual consent. Where notice of termination is provided by an employee, no reason needs to be provided.

30 days

Minimum notice period for terminating an employee

11 days

Total number of public holidays

40

Working hours per week

2 days

Total number of days for Compassionate & Bereavement Leave

Immigration

The EU Visa Code provides unified requirements for various short-term visas within the member states of the Schengen area. A work permit, issued by the labor authority in a two-step procedure, is required if the individual intends to work in Hungary. No work permit is required for the employment of EEA citizens.

Residency permits

A third-country national having a residence visa may obtain a residence permit which may entitle the individual to stay for longer than 90 days.

Work Permit Validity

3 years

Required Documents

Possess a valid travel document

Certified document of the purpose of the individual’s entry and exit into the country

Proof that the legal employment conditions are met

Proof that the individual possess full-coverage health insurance

Provision of a valid address for the individual’s stay in Hungary.

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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