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Hungary – Employer of Record

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Country Introduction – Hungary:

Capital – Budapest
Currency – Forint (HUF)
GDP –181.8 billion USD (2021)
People/Nationality- Hungarian
Language – Hungarian
Major Religion – Roman Catholic
Population – 9.70 million (2022)

As a booming economy located in the heart of Europe, and a member of the European Union, Hungary offers ideal access to a common market of more than 500 million people. Offers great opportunities for foreign companies to invest in the country. It has the lowest corporate tax rate in the EU which makes it a very attractive country to invest in

The government budget has six main objectives: to improve the productivity and innovation capacity of Hungary’s SMEs so that they become key players in international economic competition; increase employment rates and improve productivity and working conditions; investment in infrastructure contributes specifically to enhancing competitiveness; strengthen cross-border cooperation with neighboring regions; place a central role for research, development and innovation; and facilitate the widespread use of renewable energy and encourage the transition to greener, low-carbon industries, leading to a circular economy to combat climate change.

Hungary’s financial flexibility score is 64.1, making its economy the 54th freest within the 2023 List. Hungary is positioned 31st out of 44 nations within the Europe locale, and it’s in general score is well over the world normal.

Contract of Employment

In Hungary, the conclusion of a general commercial contract can be a prerequisite for establishing commercial relations. Employers undertake to draft any commercial contracts in writing.

There are contract essentials that should be included. The parties to an employment contract must agree, by all means, to both the individual’s base salary and the worker’s position – these provisions are fundamental in Hungarian labor law.

Probation Period

Probation period of not more than three months.


In case the labour contract is unstable, the notice period is 30 days. In case the notice period expires and the manager refuses, the notice period is extended according to the employee’s active period (e.g., extended by 5 days in case of operation from 3 years to 60 days). in case of 20-year operation). business).

The notice period is 30 calendar days, up to 90 days depending on the time working at the company. The parties may agree on a separate notice period, but not exceeding six months.

Working Hours

Minimum full-time working hours are 4 hours per day.

In the case of part-time work, there is no legal minimum, but the daily duration should not exceed 8 hours, which is considered full-time. The maximum weekly working time of employees is 48 hours, full-time and part-time.

In Hungary, full-time work means 40 hours a week, spread over 5 days a week (Monday to Friday), 8 hours a day, typically somewhere between 8 am and 6 pm.


Overtime hours of more than 40 hours a week are paid at 150.00% of the employee’s basic salary rate. Overtime hours worked on weekends and public holidays are paid at 200.00% of the employee’s basic salary rate.

13th Month Pay

In Hungary, a 13th-month salary is not mandatory.

Annual Leave

The most common annual leave is 20 working days per year. Likely, its term increases with the age of the 25-year-old worker and professional entitled to 21 days of annual leave. It increases by one day when increasing to two years of age until the specialist reaches the age of 45.

Sick leave

Employees are entitled to 15 days of paid leave paid by the employer. They receive a 70.00% compensation rate based on their normal compensation for the past six months. Insufficient work requires expert certification. There is no official time limit for this, up to 5 days (in special cases, in the most extreme cases 6 months – certified by the primary therapeutic body), and benefits will not be paid over a period of 1 year.

Maternity and Paternity Leave

Pregnant employees are entitled to 24 weeks of maternity leave (CSED). Take-off must begin at least 4 weeks before the scheduled delivery date.

Fathers are entitled to 5 days of paid maternity leave, 7 days in case of multiple births/complicated births, taken within two months of giving birth.


Hungary has the highest value-added tax (VAT) rate in the EU, standing at 27%, which is the default rate. Most goods and services are charged at the standard rate. Nonetheless, Hungary has implemented two decreased rates for Value-Added Tax (VAT) as well.

The standard dairy and cereal items are subject to a charge of 18%. Medication, medical apparatus, literature, livestock, and meat are eligible for a 5% charge.

Income Tax

As of 2022, a taxed rate of 15% PIT (Personal Income Tax) and 13% social tax is payable.

Employer/ Employee Contributions

The basis of social security liability is the net salary paid to the agent. The employer commitment rate (known as the ‘social tax’) is 13% by 2023. The social security commitment rate for employees is 18.5%. 15% of the unused amount of the Child Assessment Base Discount can be deducted from the total amount of 18.5% of the Social Security Commitment.

Public Holidays

January 1- New Year’s Day
March 15 – Revolution Day
April – Good Friday
April – Easter Sunday
April – Easter Monday
May 1 – Labor Day
June – Pentecost Sunday
June – Pentecost Monday
August 20 – Saint Stephen’s Day
October 23 – Republic Day
November 1 – All Saint’s Day
December 25 – Christmas Day
December 26 – 2nd Day of Christmas

Severance Pay

Severance pay depends on the employee’s most recent net income. After at least 3 years working in your company, your worker will receive a severance allowance equivalent to his net salary for 1 month. The longer they have been in business, the higher the severance package.

–  1 month, for up to three years of service;
–  2 months, for up to five years of service;
–  3 months, for up to 10 years of service;
–  4 months, for up to 15 years of service;
–  5 months, for up to 20 years of service;
–  6 months, for up to 25 years of service.

Work and Residence Permits (Expatriates)

To work and settle in the country, all non-EU nationals need a work visa and work permit. The boss oversees most methods, counting the submission of printed documents to the visa authority. The types of work allowances offered by Hungary are as follows:

–  Residence permits
–  Joint work permit
–  Personal employment allowance
–  Schengen Work Visa
–  Schengen Business Visa
–  EU Blue Card
–  Seasonal Worker Visa

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