Hire employees in Hungary
What a foreign company needs to know before employing people in Hungary: whether you need a local entity, what an employee costs with a 13% employer contribution and a 15% flat income tax, how the minimum wage and guaranteed wage minimum work, what notice and severance cost, and why the temporary agency work rules shape how you structure a hire. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first.
Do I need a local entity in Hungary to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person in Hungary through a compliant local employer, notifies NAV before the start, files the monthly 08 return and runs payroll. You direct the work.
- Direct local entity. You form a limited liability company (Kft.) with HUF 3 million share capital, then register as an employer with NAV: several weeks before the first payroll.
- Independent contractor. Lawful only for genuinely independent work. Contractors who work like employees can be reclassified, with back contributions, tax penalties and fines.
When should I use an EOR instead of registering locally?
Use an EOR for your first engineers, shared services staff or sales people in Hungary, when you want to start in days and do not want to build Hungarian-language NAV filings, tax advance declarations and cafeteria administration yourself. Your own entity earns its keep for a sustained team, a sales office signing Hungarian contracts, or long-running services to Hungarian clients that could create a permanent establishment.
What does an employee actually cost beyond salary?
Statutory employer cost is 13% of gross salary: the social contribution tax (szocho), with no ceiling. A SZÉP card at the annual maximum of HUF 450,000, taxed at 28%, is the customary benefit and takes the all-in figure to about 18%.
How difficult is termination in Hungary?
The employer must give a real, written reason based on the employee's conduct, ability or the employer's operations. Notice is 30 days, rising with service to 90 days after 20 years, and the employee is released from work for at least half of it. Severance of 1 to 6 months of pay applies on employer notice after 3 years of service. Termination by mutual agreement is the common clean exit.
Can Dryft Global legally employ my team in Hungary?
Yes. Dryft Global employs your team in Hungary through a compliant local employer structured for the temporary agency work rules. We issue Labour Code contracts, notify NAV before the start, collect tax advance declarations, file the monthly 08 return and pay taxes and contributions by the 12th, run cafeteria benefits, and manage notice and severance.
Hiring routes compared
Speed, set-up burden and liability differ by route.
| Factor | Direct local entity | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Time to first payroll | Several weeks | Days to 2 weeks | Days |
| Local entity required | Yes, Kft. or branch | No | No |
| NAV registration and monthly 08 return | Your obligation | Handled by Dryft Global | Contractor's own |
| Temporary agency work rules | Not applicable | Structured compliantly by Dryft | Not applicable |
| Statutory liability | Direct corporate exposure | Assumed by Dryft Global | High if the work is dependent |
| Best fit | Sustained team, local sales | First hires, engineering teams | Short independent projects |
What an employee costs in Hungary
Hungary has one of the simplest payroll cost structures in the European Union: a single employer contribution on gross salary, with no ceiling. The model below is a Budapest software engineer on HUF 1,000,000 a month in 2026.
| Component | Employer share | Notes |
|---|---|---|
| Social contribution tax (szocho) | 13% | No ceiling; covers pension, health and labour market funding |
| Statutory subtotal | 13% | Above gross salary |
| SZÉP card at the annual maximum | ~3.8% | HUF 450,000 a year |
| Tax on SZÉP card | ~1.1% | 28% of the card value |
| Total employer on-cost | ~18% | Above gross salary |
For an employee on HUF 1,000,000 a month, budget roughly HUF 14.1 million (about EUR 38,700) a year all-in before the EOR fee. The employee's own deductions are 18.5% social security and 15% income tax, leaving net pay of about HUF 665,000 a month before any family allowance. A tax-free home office allowance of up to HUF 32,280 a month is optional. Ask us for a cost model with current rates applied.
Payroll and tax
Salaries are paid monthly in forint, by the 10th of the following month. The employer notifies NAV of each new employee before the first working day, and files one monthly return (form 08) by the 12th of the following month, paying the employee's income tax and 18.5% contribution and the employer's 13% szocho at the same time. Tax on cafeteria benefits is reported quarterly.
Income tax withholding
Employment income is taxed at a flat 15%. The family tax allowance, doubled from 2026, saves HUF 20,000 a month for one child and up to HUF 66,000 per child for three or more. Employees under 25 and several groups of mothers are exempt from income tax on employment income, up to the applicable caps. Allowances and exemptions are applied monthly through a tax advance declaration the employee gives the employer.
Minimum wage 2026
The minimum wage is HUF 322,800 a month from 1 January 2026. Jobs requiring at least a secondary qualification must pay the guaranteed wage minimum of HUF 373,200 a month, which covers most professional roles. The 2027 rates are not yet set.
2027 budget proposals
The 2027 budget presented in October 2026 proposes a lower income tax rate on minimum-wage income and caps on the mothers' and under-25 exemptions. These are proposals in the 2027 budget, not yet enacted. Check the final rules before 2027 payroll is set up.
Leave and mandatory benefits
- Annual leave. 20 working days, plus age extras from 25 that reach 10 days from 45, plus 2 to 7 days for parents of children under 16.
- Public holidays. 13 dates including Good Friday, Easter Monday, Whit Monday and two days at Christmas, plus bridge days set each year.
- Sick pay. The employer pays 70% of the absence fee for the first 15 working days a year. State sick pay of 60% (50% in some cases) applies from day 16.
- Maternity. 24 weeks, with the infant care fee (CSED) paid by the state at 100% of earnings, not by the employer.
- Paternity. 10 working days; the employer pays and is reimbursed by the state.
- Parental leave. 44 working days per parent until the child turns three.
- Working time. 40 hours a week. Overtime pays 50% extra or time off, capped at 250 hours a year unless agreed otherwise.
- Remote work. Telework must be agreed in the contract; a tax-free home office allowance of up to HUF 32,280 a month is available.
- Common extras. SZÉP card, private health insurance and voluntary pension fund contributions.
Termination and notice periods
Probation can last up to 3 months, or 6 under a collective agreement. After that, notice and severance step up with service.
| Service | Notice | Severance on employer notice |
|---|---|---|
| Under 3 years | 30 days | None |
| 3 years | 35 days | 1 month |
| 5 years | 45 days | 2 months |
| 10 years | 55 days | 3 months |
| 15 years | 60 days | 4 months |
| 20 years | 90 days | 5 months |
| 25 years or more | 90 days | 6 months |
- Written reason. The employer must give a real reason based on conduct, ability or operations. The employee may resign without a reason.
- Garden leave. On employer notice, the employee is released from work for at least half the notice period, with pay.
- Protected periods. No employer notice during pregnancy, maternity, paternity or parental leave, or during fertility treatment.
- Collective redundancy. Thresholds start at 10 employees in 30 days, with works council consultation and 30 days' notice to the labour authority.
- Mutual agreement. Needs no reason and no statutory severance, and is the common clean exit.
Can I use independent contractors?
Only for genuinely independent work. Hungarian courts look at the substance: a defined job, a personal duty to work, your right to give instructions, set hours, your tools and a fixed monthly fee all point to employment. Reclassification brings back payments of the 13% and 18.5% contributions and income tax, with tax penalties, late interest and labour inspection fines. Placing an employee under another company's direction is also regulated as temporary agency work, which needs government registration and a HUF 15 million deposit, so the employing structure matters. For anyone who works like an employee, an EOR set up through a compliant local employer is the safe route.
The legal framework in brief
Hungary is a civil law system where the Labour Code sets most terms and states where a collective agreement or contract may depart from them. The instruments you will hear most:
- Labour Code, Act I of 2012. Contracts, probation, working time, overtime, leave, sick leave, notice, severance and temporary agency work.
- Government Decree 426/2025. The 2026 minimum wage and guaranteed wage minimum.
- Social Contribution Tax and Social Security Acts. The employer 13% and employee 18.5%, with no ceiling on employment income.
- Personal Income Tax Act. The 15% flat tax, family allowances and exemptions, and the monthly 08 return.
- Government Decree 118/2001. Registration and deposit rules for temporary work agencies.
- Data protection. GDPR, Act CXII of 2011 and section 11/A of the Labour Code, which requires advance notice of the technical means used to monitor employees.
- Immigration and right to work. EU nationals work freely. Others usually need a single permit with a labour shortage test, or an EU Blue Card at HUF 1,001,048 a month in 2026. New guest worker permit applications closed in June 2026.
- Authorities. NAV, the government offices, the immigration authority (OIF) and the data protection authority (NAIH).
Where the talent is
About 9.5 million people, with unemployment of 4.7% in August 2026. Average gross earnings were HUF 745,500 a month in July 2026, up 7.5% on a year earlier. Hungary ranked 22nd in the world for English proficiency in 2025, with higher scores in Budapest. Time is UTC+1 (UTC+2 in summer), and Hungary is in the EU, Schengen and NATO, with its own currency rather than the euro.
| Region | Talent and industry concentration |
|---|---|
| Budapest | Headquarters, shared services centres, software and fintech |
| Debrecen | Automotive, IT, pharmaceuticals and a major university |
| Szeged | University, IT and laser research |
| Pécs | University, IT and services |
| Győr | Automotive engineering |
Hungary Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first payroll
- Contract, probation and minimum wage check for the role
- NAV notification and tax advance declaration sequence
- Monthly 08 return calendar (12th) and quarterly cafeteria tax
- Contractor reclassification and agency work risk checklist
- Notice, severance and mutual agreement pack
- Every official Hungarian authority with direct links
This guide is general information, not legal, tax or immigration advice. The minimum wage and guaranteed wage minimum are reset each January, the 2027 budget contains tax proposals that are not yet enacted, and immigration rules changed in 2026. Confirm current figures and the employment structure with a qualified adviser or with Dryft. Last reviewed November 2026.
Ready to hire in Hungary?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.