Payroll in Hungary refers to all the accounting procedures and other formalities related to the taxation of employment. Payroll refers to the calculation of the employment taxes, benefits, bonuses, vacation days, sickness benefits and many others.
Payroll is a procedure that falls under the responsibility of our accountants in Hungary or it can be outsourced to the human resources department, which is usually the case of large companies.
This is an important component of any business, therefore, if you will open a company in Hungary, it is necessary to know what are the main procedures you will have to implement. For this, our consultants in company formation in Hungary remain at your service.
The main taxes referring to payroll in Hungary
Employment in Hungary is taxed just like in any other country. Employees must contribute to various funds and for retirement purposes. In the list below, our consultants in Hungarian company formation have prepared details concerning the main taxes:
- the employer in Hungary is required to pay a social contribution tax of 13%;
- the employee is also liable to taxation and the overall tax charged to the employee is of 18,50%;
- the employee tax costs are divided as follows – the health care contribution is of 7%, the pension fund is 10% and the unemployment fund is 1,50%;
- the employee income tax (the personal income tax) is charged at a rate of 15%;
- please mind that the personal income tax is not charged for employees with an age below 25 years old.
What is the payroll frequency in Hungary?
If you open a company in Hungary, you will need to abide by the regulations concerning payroll. Payroll in Hungary is payable on a monthly basis, just like it is the case of most European countries, which follow this month-to-month payment system.
In other regions, such as the UK, USA or Australia, employees can benefit from more frequent payroll payments (even from week to week).
On a yearly basis, companies are required to pay 12 salaries to their employees (after deducting all the expenses and taxes), for each month of work. In Hungary, the financial or fiscal year starts on January 1st, it ends on December 31st, and it is divided into 12 segments, for each month of the year.
With regards to the payments of these salaries, for a month of work, the employer must pay the salary by the 10th day of the next month (in practice, many employers pay the salary at the end of the month, for the work activity of that month).
Payroll in Hungary can also take into consideration the 13th salary, but this is not mandatory. In general, the 13th salary is awarded in the form of bonuses. Our accountants in Hungary can offer more information regarding this subject.
Working week regulations in Hungary
Employees are paid, in general, for a month of work, which is defined as 5 days of work per week, resulting in 4 weeks of work per month. Most of the employees work on a Monday to Friday system, but of course, many employees work during the weekend as well.
Regardless of how the work schedule is distributed, the 5 days of work per week must be comprised of 40 hours of work (8 hours per day) for full-time contracts. Provided that the employee will work more than the regular schedule, the law stipulates that the extra hours will be considered overtime and paid accordingly.
There are special regulations concerning work during nightshifts (the employee can receive 15% more, calculated from his or her basic salary).
Therefore, it is important to verify the rules concerning overtime if you will open a Hungarian company. Our consultants in company registration in Hungary remain at your service for more information referring to other payroll procedures.