Our guide to Payroll in Hungary

Investing in Hungary

The government welcomes foreign investment and has an array of financial incentives to attract foreign capital. Some of the major industries in Hungary include mining, metallurgy, construction materials, processed foods, textiles, chemicals, especially pharmaceuticals and motor vehicle production One of Hungary’s most important industries today remains automobile manufacturing. The Hungarian automotive sector is a cornerstone of the national economy, generating a significant share of industrial output and exports, with total vehicle and transport equipment export values reaching around €26 billion in recent years and production contributing heavily to Hungary’s industrial performance.

Hungary also has a strong presence in technology manufacturing and related sectors, with information and communication technology (ICT) firms contributing substantially to the country’s export portfolio. While historical figures from the mid-2000s cited hardware and IT market activity, recent data show that Hungary continues to be active in ICT production and export, with the broader tech market contributing to both domestic innovation and foreign trade.

The country benefits from a well-educated workforce. A high proportion of young adults pursue tertiary education, and Hungarian universities supply numerous graduates in engineering, science, and technology fields — an important factor supporting both manufacturing and high-tech industries. (This is a widely recognized trait of the Hungarian labor force, reflected in EU and OECD education statistics.)

Basic Facts about Hungary 

Common Phrases

Hello: Helló 
Good Morning: Jó reggelt
Good Evening: Jó estét
Do you speak English?: Beszélsz angolul?
Goodbye: Viszlát
Thank you: Köszönöm
See you later: Később találkozunk

Registrations, Establishing an Entity and Company Gate

To employ an individual in Hungary, the company needs to register for a tax number for their legal entity in Hungary.  However, the labour contract can be established between a company and employee in Hungary whilst this process takes place. The legal procedure for a company registration takes approximately 1-2 days.

It is mandatory for economic organizations in Hungary to communicate electronically with the state authorities as well as to arrange the pertaining submission and reception of documents via official platforms.

For the fulfilment of this obligation, the state provides the economic organizations with the so-called “Company Gate” (in Hungarian “Cégkapu”) service. The company gate is a free storage space that allows contact between the organizations and state organizations providing electronic administration, as all deliveries are sent to the secure, authentic storage space as required by the economic organization.

The company gate is actually a common electronic mailbox for companies/economic organizations where all concerned and authorized individuals can have access to the official correspondence/tax account extract/submitted returns of the given company or organization.

Banking

It is not mandatory to make payment to employees and authorities from an in-country bank account.

Working Week

The working week in Hungary is Monday to Friday.  The working day for commercial offices is usually eight hours, typically from 08:00 or 09:00 to 16:30 or 17:30.  Lunch breaks range from half an hour to one hour.

The Minimum Wage

Statutory minimum wage equal to 322.800 HUF and guaranteed wage minimum equal to 373.200 HUF adjusted by Government Decree effective January 2026. Employers must verify annually. The social security and maternity allowances are established according to a % of the national minimum wage, therefore employers have to follow the pertinent amendments year by year.  

Employment Law

Holiday Accruals

If an employee takes one day’s holiday, this entitles them to one day’s pay, which is calculated according to the salary and paid as absentee pay. The number of holidays / years depends on the age of the employee, and the number of own children and on statutory rules.

The Labor Code makes it clear that the allocation of vacation is the responsibility of the employer’s (Sections 122-125). The main rule is that the vacation must be granted to the employee in the year of maturity.

However, the law specifies some exceptions for example:

If the employment relationship began on or after October 1st (in this case the employer may grant the vacation until March 31st of the following year)
Based on an agreement concluded between the parties the days based on age could be carry over to the next year.

Maternity Leave

In Hungary, maternity leave is 168 days long. Maternity leave is paid, however, the calculation will depend on the employee’s income.  The income that can be taken into consideration when reporting the benefit is a maximum of 180 calendar days income, before the last day of the period of maternity leave. It is measured in the following way; the period starts from the first day of the insured period, or from the first day of the year prior to the entitlement for the benefit whichever comes first. It ends on the last day of the third month before being entitled for the service. After the expiry of this period, there are different types of maternity benefits until the child turns three years old.

Maternity allowance may be granted to persons living in the Republic of Hungary, if they:

• Are Hungarian citizens.

• Have an immigration license or a settlement permit, or are recognized by the Hungarian authority as refugees.

• Are persons subject to Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (citizens of countries belonging to the European Economic Area), provided that they have a valid residence permit at the time of filing the request for the allowance, with the exception of cross-border commuters.

The amount of the one-time payment maternity allowance per child is: 225% of the minimum amount of old-age pension as of the date when the child is born (HUF 64.125 in 2025).

Paternity Leave

Paternity leave: 10 working days. First 5 days paid at 100% absence pay; remaining 5 days at 40%.

The paternity leave regulation entitles the employee to ten additional holiday days per year. Payment is the same as absence pay for the first 5 days, which will be calculated the same way as a normal holiday. The other 5 days the father is eligible for 40% of the absence pay. The Hungarian State Treasury refund the first 5 days mandatory paternity leave pay to the employer if the employer fills in the appropriate form and submits it to the authority.

Parental leave: Each parent entitled to 44 working days parental leave until child reaches age 3. Non-transferable. Paid at 10% of absence pay (subject to cap). Dismissal protection applies

Sick Leave & Pay

A person is eligible for sick pay if he/she becomes incapable of work while being enrolled in the national social security system.  A person that has fallen ill is entitled to get 15 working days of sick leave annually.

The first 15 working days are declared as sick leave.  The employee is entitled to get 70% of their salary during the sick leave, which is paid by the employer. An insured person eligible for sick leave will get sick-pay as from the day following the expiry of sick-leave.

From the 16th day, the National Health Insurance Fund of Hungary provides the payment for the employee, which is declared as long-term sick pay (Health Insurance Benefit). The employer has to reimburse one-third of the amount to the fund.

If the number of employees exceeds 100, the employer has an administrational obligation to establish a Social Security Payment Office.

National Service

National military service in Hungary was temporarily suspended as of 2004. 

Remote Work (Home Office)

Remote work must be agreed in writing.

Employees may work remotely up to 44 working days per year without a formal telework agreement.

Employer retains occupational safety responsibility and monitoring must comply with GDPR principles.

Tax-free home office allowance remains available within statutory cap linked to minimum wage.

Working time & Overtime

Voluntary overtime agreements (up to 300 hours annually) must be documented in writing and cannot be imposed unilaterally.

Overtime premium remains 50%, or 100% on rest days and public holidays.

Employment Contracts & Employer Information Obligation

Employers must provide written information on essential employment terms within 7 calendar days of commencement (previously 15 days).

Mandatory content now includes probation conditions, detailed working time scheduling rules, overtime compensation, employer training policy, termination procedure rules, and social security authority details.

Employees may request modification of employment conditions after 6 months of employment. Employer must respond in writing within 15 days.

The tax year runs from 1 January to 31 December.

Income Tax

The employer deducts income tax and social contributions from employee wages, daily allowances, or other remuneration.

The employee needs to complete a tax return only if he/she earns income from other sources.

The tax authority (NAV) supports the duty of individual annual Personal Income Tax (PIT) declaration with a PIT Declaration Draft. This PIT Declaration Draft prepared by the authority (NAV) will be available on the NAV client platform (personal access: Client Gate).

The private person who does not have personal access to the NAV platform can ask for the PIT Declaration Draft via post and SMS.

Individuals pay a flat rate of 15%.  Two types of income are taken into account: 

• Income to be consolidated - income from activities other than self-employment, income from self-employment and other income to be consolidated.

• Income taxed separately: e.g. in-kind benefits, capital gains, income from private businesses and income from rental properties.

Take into account any:

• Tax allowances (available to all taxpayers, but the amount depends on employee’s personal situation)

• Deductions the employee is entitled to for certain types of expenditure.

Deductible expenses include:

• Some forms of state support for raising minors

• Scholarships paid by non-residents to students studying in a foreign educational institution or researchers working abroad

• Some forms of support related to the purchase of real estate

• Services of insurance companies.

Tax returns are due by 20 May of the year following the tax year.

Tax for an individual who meets the criteria of a "permanent resident" in Hungary, will be calculated on their income in Hungary and abroad.  A foreign resident who is employed in Hungary pays tax only on his/her income earned in Hungary.

All employees and anyone who is self-employed is obliged to pay tax advances.  In case of employment, the employer is obliged to deduct and pay the tax advance from the gross salary of the employee.

Personal Income Tax Advance

Employers shall pay the income tax advances they have deducted by the 12th day of the following month.  Payers shall pay the income tax advances they have deducted by the 12th day of the month following the month of payment. All taxes and contributions are paid rounded to the thousands.

Social Security 

Monthly social security contribution is paid on the 12th of the following month. 

Contributions

Contributions Paid By Employees:

Social security contribution - 18.5%

Contributions Paid By Employer:

Social security tax - 13%

Occupational Rehabilitation Contributions

Taxpayers shall pay the advance on contributions for rehabilitation purposes, calculated as defined by the relevant legislation, in the first three quarters by the 12th day of the month following the quarter.  The difference between the advances paid and the annual contribution shall be paid for the tax year by 25th February of the following tax year.

Rehabilitation contribution applies where headcount is 25 or more and statutory disability quota is unmet.

Payroll

It is legally acceptable to provide employees with online payslips in Hungary.

Reports

Personal Income Tax related payroll reports and documents must be kept for at least five years. The start of the five-year retention period is the last day of the calendar year in which the taxes should have been declared, reported or paid.

The employer is required to retain all employment and social security documents associated with each current and former employee for a period ending five years after the employee reaches retirement age. For example, the documents pertaining to an employee who was born in 1990 will have to be retained until 2060, provided that the employee retires at the age of 65.

The double taxation conventions related documents must be keep for 10 years from the last day of the year in which the tax return should have been submitted or in the lack of the tax return, from when the tax payment would have been due.

Working time records

Employers shall keep records of:

• the durations of regular working time and overtime;

• the durations of stand-by duty;

• periods of leave.
  

The records aforementioned shall be updated on a daily basis and shall contain facilities to identify the time of commencement and ending of any regular and overtime work and stand-by duty.

In the case of flexible working arrangements: the working time record does not need to be kept.

Monthly

• 2608 template - Monthly tax liability

• Reports should be filed by the 12th of the following month.

• They can be submitted electronically to the National Tax and Customs Administration of Hungary

Yearly:

M30 - Yearly Personal Income Tax Certificate

• Report should be given to the employee by 31st January

• This document is for the employee only

Járulékigazolás - Yearly Contribution Certificate

• Report should be given to the employee by 31st January

• This document is for the employee only

All yearly submissions require a signature.

New Employees

New start will be required to register with the tax authorities. The registration will be done through NAV (National Tax Authority).

The new start must be registered at least one day before the commencement of his/her work, the earlier the better.

The following information is required when setting up a new start: -

• Full name 

• Address  

• Date of birth  

• Place of birth  

• Mother’s full birth name 

• Tax card number  

• Social security (TAJ) number 

• Pension number and declaration (only in case of a pensioner) 

• Bank a/c 

• Employer’s name  

• Gross salary  

• Starting date 

• Type of contract  

• Position 

• Activity/Job code nr. (FEOR) 

• Exit documents from the previous employer  

Leavers

The T1041 document, which is an official registration form for leavers and new hires, must be completed and returned to the National Tax and Customs Administration of Hungary.

The employer has 5 workdays from the last day of work to pay the leaver employee’s last salary and other benefits, and to mail the exit documents package.

Termination Protection

Dismissal protection applies during pregnancy, maternity leave, parental leave, and certain unpaid childcare leave.

Notice period base remains 30 days, extended by length of service. Severance pay remains 1–6 months depending on service length.

If the employee is incapable of work due to illness (sick leave), dismissal is not prohibited, but the notice period may not commence until the end of incapacity, subject to statutory limits.

Employee Benefits

Expenses

• Employer must reimburse travel expenses, if the employee travels to work from the countryside.

• Employer must reimburse travel expenses, if the employee uses his/her car for business purposes.  The rate is given by the norms of the National Tax and Customs Administration of Hungary.

• Employer must pay company car tax.

Visas & Work Permits

Every non-Hungarian citizen who is willing to work in Hungary has to claim a residence permit (in case of non- EU citizens) or registration certificate (in case of EU citizens).  They have to verify to the Immigration Office their living address, having enough funds to stay in Hungary and the relevant health insurance. Non-EU citizens must also have a work permit (Switzerland is an exception).

Consolidated permit system applies for third-country nationals: Single Permit, EU Blue Card, Hungarian Card, National Card, and ICT Permit.
Employer notification obligations remain strict.

Digital Administration

Monthly tax reporting via Form 08 (formerly 2508).

Electronic payslips remain legally acceptable if GDPR-compliant and accessible to employees.

Location-Specific Considerations

Key changes for 2026

Family tax allowance

From 1 January 2026:

• For 1 child: HUF 133,340 per month.

• For 2 children: HUF 266,660 per child per month.

• For 3 or more children: HUF 440,000 per child per month.

This means that from 1 January 2026 there will be a further increase: expressed as a tax reduction, parents will be able to claim HUF 20,000 per month for one child, HUF 40,000 per child for two children, and HUF 66,000 per child for three or more children.

Parents may continue to share the family tax allowance between themselves in order to maximize the tax benefit. The allowance can be claimed during the year by submitting a tax advance declaration to the employer, or retroactively in the annual personal income tax return.

Parents raising a chronically ill or severely disabled child will be able to claim the family tax allowance from 2026 with an additional HUF 10,000 increase.

Personal income tax exemption for mothers with two children

The government will introduce the exemption for mothers with two children in four stages:

• From 2026: mothers under 40 will be exempt from personal income tax.

• From 2027: extended to mothers aged 40–50.

• From 2028: extended to mothers aged 50–60.

• From 2029: extended to mothers over 60, meaning that from this date, all mothers with two children, regardless of age, will be entitled to lifelong personal income tax exemption.

A mother raising two children is defined as a woman who, as a biological or adoptive parent, is:

a) entitled to family allowance under Act LXXXIV of 1998 on family support (Cst.), or

b) no longer entitled to family allowance, but was entitled for at least 12 years, and the total number of children under points a) and b) is two. A child under point b) is also considered equivalent if entitlement to family allowance ceased due to the death of the child.

New rules on benefits

Based on a transitional provision, employer contributions paid to the SZÉP Card between 1 December 2025 and 30 April 2026 may also be used for food purchases.

Minimum amount of personal-type payments

Under Act LXXXIV of 2025, in line with changes to the social contribution tax, the minimum amount of personal-type payments will be reduced from 112.5% of the minimum wage to 100% of the minimum wage. The minimum does not need to be applied if the member has no contribution payment obligation on a contribution base under Section 39 of the Social Security Act (Tbj.).

Social security booklet (TB booklet)

Electronic TB booklet (e-TB booklet): The paper-based TB booklet will be discontinued and replaced by a digital system for recording employment relationships and benefits from 1 January 2026. Based on this, from 1 January 2026 onwards: 

• Newly hired employees are no longer required to submit a paper-based Social Security Booklet.

• Employers may not request the submission of a Social Security Booklet.

• Data related to insurance status and health insurance benefits are recorded electronically in the e-SS Booklet system.

Further Information

For more information, or assistance with Hungary tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country.  You should always seek specific advice for each specific situation.  This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.