Do I Need a Local Entity to Hire in Hungary?

In Hungary, a "local entity" typically refers to a recognized business presence, such as a subsidiary or branch office, that can act as the employer. This setup allows you (or a provider acting on your behalf) to be recognized locally and fulfill payroll and employment obligations.

Without establishing a local entity, you usually can't do all of the following compliantly: register as an employer, manage mandatory social security processes, run local payroll with necessary withholdings, and issue compliant employment terms. Hungary's National Tax and Customs Administration outlines employer responsibilities for paying social security contributions, which is essential for being an employer in Hungary.

What is Required to Employ Someone in Hungary?

• Local employing entity required to directly employ? Yes (you need to register with the National Tax and Customs Administration)
• Payroll registration required? Yes (mandatory for employer obligations)
• Withholding/tax remittance required? Yes (employers must withhold income tax from salaries)
• Social contributions required? Yes (employers must pay social security contributions)
• Local employment agreement required? Yes (written agreements are standard practice)
• Mandatory benefits to budget? Yes (statutory leave, health insurance, and pension contributions)
• Works council/collective agreements considerations? Often (many sectors are influenced by collective agreements)

Best Options If You're Hiring in Hungary

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

While hiring contractors in Hungary doesn't require setting up a local entity, it's crucial to ensure that the contractor relationship is genuinely independent. Hungary has strong labor protections, and misclassifying a contractor as an independent worker can lead to significant legal issues.

• Ensure the contractor has multiple clients and isn't dependent on your business.
• Maintain minimal control over how the work is performed.
• Be cautious if the contractor's work is integral to your business operations.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Hungary, depending on the required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 50,000–150,000 HUF per month ($140–$420)
• Payroll provider: Estimated 10,000–30,000 HUF per employee per month ($28–$84)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 200,000–600,000 HUF per year ($560–$1,680)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, mandatory benefits)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Hungary

Hiring in Hungary can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Hungary quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.