Payroll taxes in Hungary that are of key importance to employers include Personal Income Tax, Social Security Contributions, and the Vocational Training Contribution. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Hungary.
Capital City
Budapest
Currency
Hungarian Forint
(
Ft
)
Timezone
CET
(
GMT +1
)
Payroll
Monthly
Employment Cost
13%
Navigating payroll and employment taxes in Hungary is essential for both small business owners and large enterprises operating within the country. With a range of tax obligations – from income tax withholding to social security contributions and local levies – employers must stay informed to ensure compliance.
1 January - 31 December is the 12-month accounting period that businesses in Hungary use for financial and tax reporting purposes.
The payroll cycle in Hungary is usually monthly, with employees being paid by the 10th of the month..
The minimum wage for employees in Hungary is typically 1,817.5 HUF per hour, amounting to ~HUF 290,800 per month; HUF 348,800 for skilled workers for a typical 40 hour work week.
The provision of a 13th-month salary is not legally required in Hungary, employers have the option to provide bonuses at their own discretion.
Employers in Hungary are responsible for several types of payroll-related taxes, each with specific rates, reporting obligations, and payment timelines. Compliance involves accurately calculating and withholding taxes from employee wages and ensuring that both employer and employee contributions are submitted on time.
Personal Income Tax (PIT) in Hungary is a flat rate of 15%, withheld at source by the employer from the employee’s gross salary. This tax is used to fund various state services and must be reported and paid monthly. Employers must submit the deducted amount by the 12th of the following month. Failure to comply can result in fines, back payments, and interest charges.
Hungarian employers must contribute to the national social security system, which includes pension, health care, and unemployment insurance. As of recent regulations, the employer’s contribution rate is 13%, while employees pay 18.5%, covering all social security pillars. Contributions must be calculated monthly and paid by the 12th of the following month. Penalties for late payments can include fines and accrued interest.
Employers in Hungary are also required to pay a vocational training contribution of 1.5% of the gross wage. This contribution supports vocational training and development programs across the country. Like other payroll taxes, the payment deadline is the 12th of the month following the wage payment. Non-compliance may lead to audit risks and financial penalties.
Setting up payroll correctly in Hungary is not only essential for staying compliant with national regulations, but also key to building trust and transparency with employees. From registration with the Hungarian Tax Authority to choosing the right payroll system, businesses must ensure that every step of the payroll process is aligned with legal requirements.
Let’s assume a gross monthly salary of HUF 500,000:
Understanding the tax obligations for both employers and employees is crucial when operating in Hungary's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Hungary.
In Hungary, payroll contributions are essential for both employers and employees to ensure compliance with the country's social security and vocational training systems. These contributions help fund various state programs, including pensions, healthcare, unemployment insurance, and vocational training programs.
Employer payroll contributions are generally estimated at an additional 13% on top of the employee salary in Hungary.
In Hungary , the typical estimation for employee payroll contributions cost is around 18.5%.
Hungary applies a 15% flat rate for individual income tax. For employees under 25, a reduction to the taxable amount is applicable based on their earnings within the consolidated tax base, capped at a maximum monthly discount of 499,952 HUF.
The pension system in Hungary encompasses both state and private pension schemes. The state pension system relies on contributions from employees, employers, and the government. The retirement age typically stands at 62 for both genders, although it can vary based on factors like the number of years of pension contributions. It's essential to recognize that pension systems undergo adjustments over time, subject to factors such as government policies and economic conditions.
Global employers operating in Hungary often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Hungary.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Hungary, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Hungary.
Key functions of a payroll management platform can include:
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
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FAQS
Payroll taxes are calculated based on gross wages, applying fixed percentages for each category: income tax, social security contributions, and vocational training. Employers must deduct the appropriate amounts from employees and also contribute on top of gross wages.
Employers can manage payroll in-house using accounting or payroll software, outsource to a payroll service provider, or work with a local tax consultant for more complex needs.
Key elements include gross salary, deductions (PIT and employee social contributions), employer contributions, payment deadlines, and proper documentation and reporting to the Hungarian Tax Authority (NAV).
In total, employee deductions amount to 33.5% of gross wages, while employer contributions amount to 14.5%, though this may vary slightly based on sector or special employment conditions.
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