Employing in Hungary

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Enter the Hungarian market without the requirement of opening a local entity.

Expanding into
Hungary

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

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Expanding to countries such as Hungary – which is characterized by a multilingual and highly educated workforce, versatile employment and tax laws, a strong infrastructure network linking to the rest of Europe, and leading sectors in automotives, electronics, pharmaceuticals and medical technology, ICT, and agriculture – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to Hungary

Learn all about expanding into Hungary and see what we can do to make your expansion easier.

Download our Guide to Hungary

Learn all about expanding into Hungary and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in Hungary

Hiring Staff
in Hungary

The Main Sectors of the Hungarian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

About 70% of the total land area is considered suitable for agriculture while only 48% is arable land. The land under agriculture decreased by 30,000 between 1996 and 2000. Prior to the economic and political transition, agriculture accounted for about 17% of the GDP and employed about the same percentage of the workforce. It also accounted for 22% of the total food export.

Agriculture accounts for only 3.3% of the GDP and just 4.7% of the workforce. Its contribution to food export has also reduced to about 7%. The fall can be attributed to the growth of other sectors and the shrink in production. Despite the decline, the Hungarian agriculture is still self-sufficient and export oriented.

The major crops grown in Hungary include corn, wheat, potato, sunflower, sugar beet, and a wide range of fruits. The country is one of the leading producers of poppy seeds. Hungary also has a number of wine regions producing some of the famous wines such as the white dessert wine Tokaji. Extensive animal husbandry is also practiced in Hungary with about 33,000 farmers engaged in the industry. The country is the second-largest producer and largest exporter of foie grass.

Hungary is one of the most preferred destinations of foreign investors in the automotive industry. The automobile companies their plants in the country include Mercedes-Benz, Suzuki, Audi, and General Motors. Audi, Suzuki, and Opel account for about 17% of the total Hungarian export.

The automobile industry in Hungary employs about 100,000 people in the over 350 car component manufacturing companies.

The Audi engine manufacturing plant in Gyor is the largest in Europe and the third largest in the world, investing over 3,300 million pounds in the plant. The Daimler-Benz has created over 2,500 jobs at their new plant in Kecskemet which has a capacity to produce 100,000 Mercedes-Benz compact cars annually. The Opel plant in Szentgotthard currently produces over 500,000 engines and cylinder heads annually.

Hungary is one of the most preferred travel destinations in Europe. It was the 13th most visited country in the world in 2002 and the 24th most visited in 2011.

Because of the number of tourists visiting Hungary, the tourism sector has employed over 150,000 people and also offers additional indirect jobs, especially in the media industry.

One of the country’s most preferred destinations is Lake Balaton, Central Europe’s largest freshwater lake which attracts about one million tourists annually. Budapest, Hungary’s capital, is the most visited region, attracting over 3 million visitors annually.

The electronics industry is also one of the major industrial sectors of Hungary, accounting for about 22% of the manufacturing production. Hungary is the largest electronics maker in Central Europe and is responsible for about 26% of the entire regional manufactured electronics. This industry has directly employed about 115,000 people.
The ICT segment comprises of telecommunication, IT outsourcing, hardware and software manufacturing, and IT services. The ICT sector is one of the major Hungarian businesses and is responsible for about 10% of the GDP and employs about 100,000 people.

This sector has developed rapidly over the past years and is today the leading computer assembly and communication tools manufacturer.

Hungary has a stable and well-established health care system in the form of a universal healthcare system managed by the National Healthcare Fund. Pharmaceutical businesses are highly flourishing and contributing greatly to the economy.
The food industry is also one of the significant industries in the country. Despite its dropping shares in the output of the national industry, food processing continues to be a key sub-division of the agricultural sector. Revenue from food industry export is crucial to the nation’s general trade balance, accounting for 6% of the total export.

Other industries that contribute significantly to the nation’s economy and are important sources of employment and foreign earnings include mining, energy production, steel production, and construction.

The Main Sectors of the Hungarian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Budapest parliament, Hungary
About 70% of the total land area is considered suitable for agriculture while only 48% is arable land. The land under agriculture decreased by 30,000 between 1996 and 2000. Prior to the economic and political transition, agriculture accounted for about 17% of the GDP and employed about the same percentage of the workforce. It also accounted for 22% of the total food export.

Agriculture accounts for only 3.3% of the GDP and just 4.7% of the workforce. Its contribution to food export has also reduced to about 7%. The fall can be attributed to the growth of other sectors and the shrink in production. Despite the decline, the Hungarian agriculture is still self-sufficient and export oriented.

The major crops grown in Hungary include corn, wheat, potato, sunflower, sugar beet, and a wide range of fruits. The country is one of the leading producers of poppy seeds. Hungary also has a number of wine regions producing some of the famous wines such as the white dessert wine Tokaji. Extensive animal husbandry is also practiced in Hungary with about 33,000 farmers engaged in the industry. The country is the second-largest producer and largest exporter of foie grass.

Hungary is one of the most preferred destinations of foreign investors in the automotive industry. The automobile companies their plants in the country include Mercedes-Benz, Suzuki, Audi, and General Motors. Audi, Suzuki, and Opel account for about 17% of the total Hungarian export.

The automobile industry in Hungary employs about 100,000 people in the over 350 car component manufacturing companies.

The Audi engine manufacturing plant in Gyor is the largest in Europe and the third largest in the world, investing over 3,300 million pounds in the plant. The Daimler-Benz has created over 2,500 jobs at their new plant in Kecskemet which has a capacity to produce 100,000 Mercedes-Benz compact cars annually. The Opel plant in Szentgotthard currently produces over 500,000 engines and cylinder heads annually.

Hungary is one of the most preferred travel destinations in Europe. It was the 13th most visited country in the world in 2002 and the 24th most visited in 2011.

Because of the number of tourists visiting Hungary, the tourism sector has employed over 150,000 people and also offers additional indirect jobs, especially in the media industry.

One of the country’s most preferred destinations is Lake Balaton, Central Europe’s largest freshwater lake which attracts about one million tourists annually. Budapest, Hungary’s capital, is the most visited region, attracting over 3 million visitors annually.

The electronics industry is also one of the major industrial sectors of Hungary, accounting for about 22% of the manufacturing production. Hungary is the largest electronics maker in Central Europe and is responsible for about 26% of the entire regional manufactured electronics. This industry has directly employed about 115,000 people.
The ICT segment comprises of telecommunication, IT outsourcing, hardware and software manufacturing, and IT services. The ICT sector is one of the major Hungarian businesses and is responsible for about 10% of the GDP and employs about 100,000 people.

This sector has developed rapidly over the past years and is today the leading computer assembly and communication tools manufacturer.

Hungary has a stable and well-established health care system in the form of a universal healthcare system managed by the National Healthcare Fund. Pharmaceutical businesses are highly flourishing and contributing greatly to the economy.
The food industry is also one of the significant industries in the country. Despite its dropping shares in the output of the national industry, food processing continues to be a key sub-division of the agricultural sector. Revenue from food industry export is crucial to the nation’s general trade balance, accounting for 6% of the total export.

Other industries that contribute significantly to the nation’s economy and are important sources of employment and foreign earnings include mining, energy production, steel production, and construction.

Commercial Laws in
Hungary

  • The Hungarian Tax and Customs Authority (NAV) – a central budget organization operating as a central office performing public administration and equipped law enforcement tasks. NAV performs the tasks of the state tax authority and customs authority defined by law. The tasks of NAV are carried out through the authority’s central and regional bodies.
  • The National Labor Office (NMH) – The NMH is under the direct supervision of the Ministry for National Economy, which is responsible for the general planning of the Hungarian economic policy and the implementation of the national economic strategy. The Ministry’s mandate includes fields such as job creation, taxes, competitiveness, budget preparation, reducing the national debt and stimulating economic growth.The NMH also has a professional autonomous branch called the “Occupational Safety and Health and Labor Inspections Directorate” (NMH-MMI).

In Hungary, employment relationships must be concluded in written employment contracts. There are two types of employment contracts – the indefinite contract and the fixed-term contract.

The Labor Code is the main source of employment law in Hungary, which governs employment conditions, benefits, and health and safety regulations. National legislation also protects the basic rights of both the employers and employees. The conditions of the Labor Code that are performed may vary according to the industry and sector – so it is best to confirm with the National Employment Service or the Labor Inspectorate on what regulation applies.

For more information on labour contracts law in Hungary Download our Hungary Country Guide…

Income Tax: The Personal Income Tax (PIT) in Hungary is 15% of taxable gross income. An individual’s liability to pay income tax is determined by their residency status as well as the source of their income. Both residents and non-residents are taxed on their income – residents are taxed on worldwide income, whilst non-residents are only taxed on income received from Hungarian sources.

There are two types of income that are considered in Hungary:

  1. Income to be taxed together: income from employment, self-employment, and other income
  2. Income to be taxed separately: benefits, capital gains, income from private businesses, and income from rental properties.

Income derived from employment activity performed in Hungary is considered as domestic-source income, even if it is paid from abroad – in these cases, income tax is still due. However, it is mandatory to register for a Tax Identification Number.

The current tax return system is based on self-assessment – individuals can file tax returns themselves or review draft tax returns prepared for them by the tax authorities via the online tax authority platform known as Client Gate (or eSZJA) and can amend, as necessary.

Income tax is withheld by employers and paid to the National Taxes and Customs Administration (NAV) monthly. Employers must pay by the 12th day of the following month.

For more information on tax contributions and benefits in Hungary Download our Hungary Country Guide…

Commercial Laws in
Hungary

Panoramic view of Budapest by night
  • The Hungarian Tax and Customs Authority (NAV) – a central budget organization operating as a central office performing public administration and equipped law enforcement tasks. NAV performs the tasks of the state tax authority and customs authority defined by law. The tasks of NAV are carried out through the authority’s central and regional bodies.
  • The National Labor Office (NMH) – The NMH is under the direct supervision of the Ministry for National Economy, which is responsible for the general planning of the Hungarian economic policy and the implementation of the national economic strategy. The Ministry’s mandate includes fields such as job creation, taxes, competitiveness, budget preparation, reducing the national debt and stimulating economic growth.The NMH also has a professional autonomous branch called the “Occupational Safety and Health and Labor Inspections Directorate” (NMH-MMI).

In Hungary, employment relationships must be concluded in written employment contracts. There are two types of employment contracts – the indefinite contract and the fixed-term contract.

The Labor Code is the main source of employment law in Hungary, which governs employment conditions, benefits, and health and safety regulations. National legislation also protects the basic rights of both the employers and employees. The conditions of the Labor Code that are performed may vary according to the industry and sector – so it is best to confirm with the National Employment Service or the Labor Inspectorate on what regulation applies.

For more information on labour contracts law in Hungary Download our Hungary Country Guide…

Income Tax: The Personal Income Tax (PIT) in Hungary is 15% of taxable gross income. An individual’s liability to pay income tax is determined by their residency status as well as the source of their income. Both residents and non-residents are taxed on their income – residents are taxed on worldwide income, whilst non-residents are only taxed on income received from Hungarian sources.

There are two types of income that are considered in Hungary:

  1. Income to be taxed together: income from employment, self-employment, and other income
  2. Income to be taxed separately: benefits, capital gains, income from private businesses, and income from rental properties.

Income derived from employment activity performed in Hungary is considered as domestic-source income, even if it is paid from abroad – in these cases, income tax is still due. However, it is mandatory to register for a Tax Identification Number.

The current tax return system is based on self-assessment – individuals can file tax returns themselves or review draft tax returns prepared for them by the tax authorities via the online tax authority platform known as Client Gate (or eSZJA) and can amend, as necessary.

Income tax is withheld by employers and paid to the National Taxes and Customs Administration (NAV) monthly. Employers must pay by the 12th day of the following month.

For more information on tax contributions and benefits in Hungary Download our Hungary Country Guide…

FAQ

An Employer of Record (EOR) in Hungary serves as the legal employer for your workforce, handling compliance with local employment laws, taxes, and payroll, while your company maintains operational control. This arrangement allows quick market entry without the need to establish a local entity, easing the complexities of hiring and managing employees in a foreign country. EOR services are particularly beneficial for companies looking to expand globally without getting entangled in the bureaucratic red tape of setting up a subsidiary.

To hire talent in Hungary, you can use Talent Acquisition solutions along with Employer of Record (EOR) services which allow you to legally employ staff and manage payroll without setting up a local entity. This service manages all compliance with Hungarian employment laws on your behalf, making it easier to tap into local talent pools swiftly and effectively.

To manage payroll in Hungary, you have several options. Outsourcing can be particularly effective as it ensures compliance with local payroll regulations and relieves your company of administrative burdens. Services typically include handling payroll processing, tax, and social security filings, and maintaining up-to-date compliance with local laws.

No, you do not necessarily need an entity to hire in Hungary. You can use an Employer of Record (EOR) service to employ staff legally without establishing a local entity. This service manages all employment-related compliance, including payroll and taxes, allowing your business to operate in Hungary without the complexity of setting up a subsidiary.

FAQ

An Employer of Record (EOR) in Hungary serves as the legal employer for your workforce, handling compliance with local employment laws, taxes, and payroll, while your company maintains operational control. This arrangement allows quick market entry without the need to establish a local entity, easing the complexities of hiring and managing employees in a foreign country. EOR services are particularly beneficial for companies looking to expand globally without getting entangled in the bureaucratic red tape of setting up a subsidiary.

To hire talent in Hungary, you can use Talent Acquisition solutions along with Employer of Record (EOR) services which allow you to legally employ staff and manage payroll without setting up a local entity. This service manages all compliance with Hungarian employment laws on your behalf, making it easier to tap into local talent pools swiftly and effectively.

To manage payroll in Hungary, you have several options. Outsourcing can be particularly effective as it ensures compliance with local payroll regulations and relieves your company of administrative burdens. Services typically include handling payroll processing, tax, and social security filings, and maintaining up-to-date compliance with local laws.

No, you do not necessarily need an entity to hire in Hungary. You can use an Employer of Record (EOR) service to employ staff legally without establishing a local entity. This service manages all employment-related compliance, including payroll and taxes, allowing your business to operate in Hungary without the complexity of setting up a subsidiary.

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