Running Payroll in Hungary

As a member of the European Union, Hungary remains a strategic and cost-effective location for international companies looking to expand into the European market or outsource services, particularly in IT and business support. Whether acting as a resident or foreign employer, companies setting up payroll in Hungary must understand the local legal landscape to ensure compliance.

Several administrative steps are required before employers can begin processing payroll, including registration with the Hungarian Tax Authority (NAV) and notifying authorities of any new hires. Employers should also stay alert to frequent legislative changes that affect payroll and taxation.

Companies need to register with several local authorities before they can start processing payroll in Hungary. First of all, it is necessary to register with the Hungarian National Tax and Customs Office (NAV) in order to obtain a tax number. It is possible to appoint an official representative to handle tax registration on behalf of the employing company; specific authorization forms are required to confirm this arrangement. Please note that all registration forms and official communication must be submitted in Hungarian.

New hires—as well as employment terminations—must also be reported to NAV using form T1041, which must be submitted no later than the day before the employment starts or ends. For tax withholding, filing, and payment purposes, it is mandatory to create an account for the Cégkapu (Company Gate), the Hungarian government’s official online communication platform for companies. All communication with statutory authorities, including tax and social security filings, must be submitted via this secure portal.

Furthermore, employers are required to register with the Hungarian Central Statistical Office (KSH). It is no longer necessary to register separately with the National Health Insurance Fund (legislative change effective as of July 2024). Setting up a local bank account is not legally required, but it is strongly recommended for the efficient disbursement of wages and payment of contributions in Hungarian Forints (HUF).

Compared to Western European countries such as Belgium, France, or Germany, Hungary’s social security and income tax system is relatively straightforward. Employment income is taxed at a flat rate of 15%, and social security contribution rates are clearly defined by law.

Tax considerations

Hungary distinguishes between resident and non-resident taxpayers. Non-residents are taxed only on income sourced in Hungary, while residents are subject to tax on their worldwide income.

Tax residency is typically determined by the 183-day rule—i.e. whether the individual spends more than 183 days in Hungary during a given tax year. However, an individual may also be considered a tax resident if their only permanent home is in Hungary or if Hungary is their center of vital interests, such as family and economic ties.

The flat income tax rate remains 15%. Various tax allowances are available, including those for families with children, newlyweds, and other qualifying life circumstances. As of 2025, there is no dedicated tax regime for expatriates, although general allowances and credits apply equally to foreign and domestic taxpayers.

Tax Withholding and Reporting

It is the employer’s responsibility to calculate and withhold personal income tax from the employee’s gross salary and remit the withheld amount to the Hungarian Tax Authority on a monthly basis. Payments can be made using either a local or foreign bank account, provided the transaction complies with Hungarian currency regulations.

Employers must also submit a monthly return that includes detailed information on both income tax and social security contributions via the official government portal (Cégkapu). The deadline for both the payment and submission is the 12th day of the month following the payment period.

Employees are required to file an annual personal income tax return, which is due by 20 May of the following tax year. This deadline may be extended to 20 November under specific conditions (such as receiving foreign income or opting for self-filing instead of using NAV's pre-filled return). To facilitate this, employers must issue and provide employees with two separate annual certificates: one for income tax and one for social contributions, by 31 January of the following year.

If the employee is paid by a foreign employer not registered in Hungary, the employee is personally responsible for making quarterly advance tax payments to the Tax Authority. The Hungarian tax year coincides with the calendar year.

Social Security Contributions

In addition to calculating and withholding income tax, employers in Hungary are also responsible for withholding the employee’s share of social security contributions and paying their own employer contributions. The social security contribution base is the employee’s gross income, and the employer's social tax rate (i.e., the employer’s contribution) remains at 13% as of 2025.

The employee’s contribution is set at 18.5% of gross monthly income. In 2025, employees may deduct 15% of the unused portion of the child tax base allowance from their total social security contribution obligations. This deduction applies to the 18.5% contribution amount and helps reduce the employee’s overall liability.

The withheld contributions—both employer and employee shares—must be submitted to the Hungarian Tax Authority along with the income tax payment by the 12th of the month following the pay period. These contributions must also be included in the monthly tax and social security declaration submitted via the government’s official online platform.

Non-resident employers have the same withholding and filing obligations as resident employers if their employees are subject to Hungarian social security. In cases of non-compliance by the employer, the liability may shift to the employee.

Employees in Hungary are entitled to various benefits. These include:

• Annual leave and public holidays: minimum 20 days, increasing with seniority (30 days maximum); 11 public holidays

• Maternity leave: 24 weeks

• Paternity leave: 10 days

• Parental leave: up to 2 years, paid by Social Security

• Sick leave: first 15 days paid by the employer; extended sick pay (up to 1 year) covered by social security if eligible

For more information on employee benefits and other employment requirements in Hungary (including severance pay and termination procedures), check out our Global Hiring Guide.

Minimum wage rates are adjusted by the Hungarian government annually. As of January 1, 2025, the national minimum wage is HUF 290,800 per month, and the guaranteed minimum wage for positions requiring at least a secondary-level qualification is HUF 348,800 per month. There is no legal obligation to pay a 13th salary in Hungary; however, some employers may choose to offer it as a voluntary benefit.

Overtime pay is regulated by law. For work performed beyond the standard 8 hours per day or 40 hours per week, employees are entitled to a wage supplement of 50% of their regular hourly rate. Work performed on rest days or public holidays entitles employees to either a 100% wage supplement or a 50% wage supplement combined with equivalent time off.

Payroll in Hungary is generally processed on a monthly basis. The pay date should be stipulated in the individual employment contract. However, in the absence of an alternative agreement, payments to employees must be made no later than the 10th day of the month following the respective pay period.

Salaries and wages need to be paid in Hungarian Forint (HUF), the local currency. Payments can be made either in cash or via bank transfer. If payment is made in cash, a written receipt is necessary. Electronic payments of wages can be issued from a foreign bank account, provided that the employee incurs no additional costs and has access to their wages on payday.

Employers are mandated to issue a payslip that provides detailed information on the employee’s earnings, deductions, and the amounts of income tax and social security contributions paid. Electronic payslips are legally permitted, provided they meet the legal requirements and are accessible to the employee. Payroll records must be retained for a minimum of 7 years, in accordance with Hungarian legal requirements.