Establishing and maintaining a Hungary payroll
Hungary is an exciting European country with an economy that has developed greatly in the last few decades. The nation has a strong export economy, and has become very successful in the field of electronics, among other industries.
However, to build a business and hire employees in Hungary, you normally need to establish a Hungary payroll and may need to register an official entity. This is a complicated process and requires strict adherence to the country’s unique regulations and application procedures. Because of this, the payroll setup process can take longer than expected and cause delays with expansion efforts, potentially costing your business time and lost revenues.
At New Horizons, we specialize in providing Hungary payroll outsourcing to foreign businesses aiming to build a presence in the region. We will handle the setup, running, and any associated administration for your Hungary payroll, simplifying the whole process and empowering you to focus on the important job of a successful expansion, even if you don’t have an established entity in Hungary.
If you have an entity
For businesses that have already registered an official entity in Hungary, we offer a comprehensive and tailored payroll outsourcing service. Our expert team will set up and manage your payroll, also handling all of your associated administration, HR, and compliance with local laws.
This level of outsourcing is ideally suited to larger organizations and those expanding into Hungary in the long-term.
If you don’t have an entity
If you don’t have a registered entity in Hungary, you can use our full payroll outsourcing service. Our Hungarian subsidiary will act as employer of record for your employees, and our team will handle the HR, administration, and complex legal compliance work.
Choose this service for a low-risk, flexible, and scalable solution for your Hungarian payroll setup and management, with all the benefits of hiring locally and none of the usual complications.
Build your business in Hungary with help from New Horizons
Hungary payroll guide
What withholdings and taxes are required in Hungary?
Employers in Hungary are required to pay around 27% on top of salaries to the country’s social security fund. Employees must contribute 9.5% and 7.5% of their salaries for social security and health insurance respectively.
The standard income tax rate in Hungary is 15%.
Entitlements and terminations
There is no legally mandated limit to probation periods in Hungary, but periods are almost always kept at a reasonable length i.e. a few months at maximum.
Employees must be provided with at least 30 days of notice prior to termination. This notice period is increased depending on the employee’s length of time with their employer:
- Three years of employment = Five days extra
- Five years of employment = 15 days extra
- Eight years of employment = 20 days extra
- Ten years of employment = 25 days extra
- 15 years of employment = 30 days extra
- 18 years of employment = 40 days extra
- 20 years of employment = 60 days extra
Employees can also be entitled to severance pay if they are terminated in specific circumstances, ranging from one month to six months depending on the length of service, and a further three months if the employee is within five years of their retirement.
How to establish a Hungary payroll
If you want to hire and set up a payroll in Hungary, we recommend establishing a Hungarian entity first. However, tackling this independently can be complicated, possibly leading to delays and impacting your profits.
Alternatively, you can choose to outsource your Hungary payroll to New Horizons. We provide the use of our Hungary subsidiary to act as employer of record for your Hungarian workforce, so you won’t have to go through the complex process yourself and can benefit from our outsourcing services even without a registered entity in Hungary. Additionally, we can build your payroll and manage your HR, compliance, and any other associated administration, enabling you to work on successfully expanding your businesses in Hungary.