Hiring at a Glance

Hungary is an EU country with a diversified economy (strong in automotive, pharmaceuticals, IT, and manufacturing). Employment is regulated by the Hungarian Labour Code (Act I/2012), which requires written contracts and sets a standard 40‑hour workweek. Employees receive at least 20 days paid annual leave (rising with age) and 15 public holidays. Payroll compliance includes a flat 15% personal income tax on wages. Statutory payroll contributions are relatively low: employers pay a 13% social contribution (on gross wage), while employees pay 18.5% (7% health + 10% pension + 1.5% unemployment). Hungary’s government offers attractive tax incentives (e.g. a 9% corporate tax rate) and foreign investment is encouraged. An EOR in Hungary handles all local requirements, sparing foreign companies from complex registration. It effectively becomes the legal employer and manages payroll and statutory contributions on behalf of the company.

‍

Key characteristics of talent market

The Hungarian workforce is well-educated, particularly in engineering, science, and IT. Technical education is strong (e.g. Budapest University of Technology) and English proficiency is common in business circles. Labor costs are lower than Western Europe but higher than many Eastern neighbors, offering a skilled yet cost-effective labor pool. The EU-aligned legal framework ensures familiar protections (e.g., 40-hour week, overtime rules) and stable business environment. Hungary combines Central European access with competitive costs, which has attracted multinationals (especially in auto and IT). Employers will find reliable compliance structures (e.g., straightforward flat tax and clear contribution rates) and a workforce strong in engineering, software development, and business services.

‍

Most In-Demand Skills in 2026

In Hungary, demand is high for technology and engineering talent. Software engineers, data scientists, and IT specialists are needed to support the growing tech and startup sectors. Industrial skills, especially automotive and mechanical engineering (reflecting Hungary’s large automotive industry), continue to be in demand. The pharmaceuticals and life sciences industries also require skilled professionals (chemical, biomedical engineering). On the services side, finance and accounting professionals are sought for Budapest’s expanding business services and finance industries. Consequently, top in-demand skills include software development, automation/robotics engineering, electrical/mechanical engineering, and finance & analytics roles.

‍

Top Universities Supplying Talent

Hungary’s top universities feed the job market with skilled graduates. Leading institutions include the Budapest University of Technology and Economics (BME) – a premier engineering school – and Corvinus University (Budapest) for economics and business. Other notable schools are Eötvös Loránd University (Budapest), Semmelweis University (health sciences), and the University of Debrecen. These universities appear in global rankings (for example, BME frequently ranks around top 100-200 in engineering). They produce engineers, IT specialists, scientists, and business graduates. Companies hiring in Hungary often recruit on campus at these universities or target their alumni for technical and managerial roles.

‍

Salary Benchmarks for Roles

Hungarian salaries are lower than Western Europe but competitive regionally. Payscale data indicate that the average software developer in Hungary earns about HUF 7.9M (~€20,000) per year (median; entry-level below this, experienced can earn more). Other roles such as data analysts or systems engineers have similar averages in the €15k–30k range. Project managers, product managers, and finance managers command higher salaries: mid-level managers often earn between €35k–70k annually, with senior-level roles reaching €60k–90k depending on industry and company. For instance, an experienced finance manager in Budapest might earn mid- to high-€30k, with top performers in major companies earning well over €50k. Overall, expect mid-career IT specialists and managers to be in the upper part of these ranges, while entry-level positions start below €20k. (Note: Hungarian employers also provide benefits like meal vouchers or pension contributions, which complement base pay.)

‍

Employer of Record vs Legal Entity Setup in Hungary

‍

To legally hire employees, a company must

Hungary requires an employer to register with national authorities before hiring. After incorporation (typically as a Kft.), a company must register with the Hungarian National Tax and Customs Office (NAV) to obtain a tax number. It is also mandatory to register any new hires with NAV using form T1041 (the “bejelentőlap”) at least one day before the employment starts. Employers must likewise register with the Central Statistical Office (KSH) for statistical reporting purposes. Notably, separate registration with the National Health Insurance Fund was abolished in 2024 – social contributions are handled through NAV filings. Written employment contracts conforming to the Labour Code must be provided for each employee. In payroll, employers withhold 15% income tax from salaries and remit employer social contributions (13%) monthly. Employers also make mandatory pension contributions (6% of salary) to individual pension accounts. All filings (tax returns, social contributions) are done via Hungary’s government portal (Cégkapu). In practice, this means: register tax ID, set up payroll accounts, hire (with contract), report hires to NAV, and then manage monthly payroll withholdings and contributions.

‍

Cost of Entity Setup

In Hungary, forming a limited liability company (Kft.) requires HUF 3,000,000 (~€8,000) in minimum share capital. This capital is placed in the company bank account at incorporation. The registration can be completed online (remote incorporation) and typically takes about 2–3 weeks (name reservation 1–2 days; court registration ~10 days). Other costs include notary fees and any legal assistance. Although the setup is straightforward, running a Hungarian entity involves ongoing obligations: maintenance of Hungarian-language accounting, yearly tax filings (despite low 9% corporate tax, compliance requires diligence), and full payroll administration. For employment costs, note that labor insurance and pension obligations apply on top of base salaries. Many small firms therefore prefer using an EOR to avoid the overhead of maintaining the entity and doing payroll themselves.

‍

What Hiring Through an EOR Means in Hungary

An Employer of Record (EOR) in Hungary becomes the legal employer registered with the National Tax and Customs Administration (NAV), social security system, health insurance authority, and labour inspectorate, while the employee works exclusively for your company. You manage daily work and performance; the EOR carries all statutory employer responsibility.

Hungarian employment is governed by:

• Hungarian Labour Code
  
• Social Security Act
  
• Personal Income Tax Act
  
• Labour inspection framework
  

Foreign companies cannot legally employ staff in Hungary without:

• A Hungarian employing entity
  
• Registration with NAV
  
• Social security and payroll setup
  

An EOR provides this entire employer infrastructure without requiring you to establish a Hungarian company.

An EOR in Hungary handles:

• Hungary-law compliant employment contracts
  
• Payroll processing in HUF
  
• Income tax withholding and filing
  
• Social security contributions
  
• Health insurance contributions
  
• Statutory leave and public holidays
  
• Termination and labour-inspection handling
  
• Immigration and residence permits
  

This model is ideal for companies that want to hire in Hungary without managing NAV registration, social insurance, and labour-inspection exposure directly.

‍

Risk Involved in Both Models

Hungarian labour law is procedure-driven and inspection-heavy.

Key characteristics:

• Written contracts required
  
• Mandatory social and health insurance
  
• Strong minimum wage rules
  
• Labour inspections
  

Compliance failures can result in:

• Back payment of wages
  
• Insurance penalties
  
• Inspection fines
  
• Court-ordered compensation
  

In Hungary, wrong termination and miscalculated insurance are the biggest employer risks.

‍

EOR Vs. Entity: When to use What?

‍

Why an EOR Is the Most Efficient Way to Hire in Hungary

Hungary offers strong talent in automotive, shared services, engineering, and IT but employment is governed by insurance rules, labour inspections, and strict termination law.

An EOR is not just payroll. It is the legal employer recognised by Hungarian authorities, responsible for:

• Labour Code compliance
  
• Tax and insurance filings
  
• Payroll execution
  
• Termination handling
  

This allows foreign companies to operate in Hungary without inheriting labour-inspection and court exposure.

‍

#1. EOR Manages Social and Health Insurance Risk

Employment cost includes:

• Social security
  
• Health insurance

‍

‍

#2. EOR Controls Minimum Wage and Working Time

Hungarian law sets:

• National minimum wage
  
• Working hour limits
• Overtime rules

‍

‍

#3. EOR Controls Termination and Inspection Risk

Termination in Hungary requires:

• Valid reason
  
• Written notice
• Notice period

‍

‍

#4. EOR Avoids Entity & Admin Burden

Entity setup requires:

• Company registration
  
• Tax and insurance registration
  
• Payroll systems

‍

‍

EOR vs. PEO in Hungary: How to Decide the Right Hiring Model?

A PEO in Hungary cannot legally employ workers. A Hungarian employing entity is required.

• PEO: HR/payroll support only
  
• EOR: Legal employer

‍

‍

If you don’t want to manage Hungarian tax, insurance, and inspections yourself, EOR is the right model.

‍

Payroll, Taxes, and Monthly Compliance

Hungarian payroll runs monthly with a common pay date on the 10th of the following month. Employers withhold a flat 15% personal income tax from wages and pay employer social contributions of 13% on gross salaries. Employees additionally pay 18.5% (7% health + 10% pension + 1.5% unemployment). All tax withholdings and contributions are paid monthly via an electronic filing system. Employers must file a monthly payroll report to the tax authority (and insurance funds) listing all wages and deductions. Payslips detailing gross pay, each deduction, and net pay must be given to employees. There is no requirement for an annual income tax return for most employees (the tax is final after payroll withholding), but employers do file annual summaries. Staying compliant means paying all withholdings (tax and contributions) by the 10th of the following month and submitting accurate payroll reports through the government portal (Cégkapu).

‍

Salary Structure: Where Most Compliance Issues Begin

In Hungary, payroll compliance issues often stem from overtime pay and benefit calculations. Overtime is regulated by contract and law: work beyond 40 hours/week must be paid at least 150% of the base wage (200% on weekends/holidays). Many compliance problems occur when overtime hours are not properly tracked or compensated. Another pitfall is mandatory bonuses: for example, if a company contractually guarantees a 13th-month bonus, failure to pay it (or to include it in contributions) can lead to legal penalties. Likewise, any fringe benefits or allowances promised to employees must be reported and are often taxable. Incorrectly excluding parts of salary from the contribution base (for example, fringe benefits that should be insured) can lead to fines. Employers must also ensure the correct holiday entitlement and premium payments are given (e.g., paid sick leave must follow the 15-day rule). In sum, strict attention to calculating overtime, bonuses, and benefits (and including them in social contributions) is critical to avoid compliance issues.

‍

What Monthly Payroll Operations Actually Involve

Monthly payroll in Hungary follows a set workflow. Employers start by calculating each employee’s gross pay for the month (including any overtime or extra benefits). They then deduct 15% income tax and the employee’s 18.5% in contributions. The employer’s 13% social contribution is computed on top of the gross salary. Net salaries are paid out (by the 10th of the next month) and electronic payslips are provided. Employers then remit all withholdings to the authorities: income tax and both employer/employee contributions are paid together to the tax authority’s accounts. Finally, a payroll report (including each employee’s withholding) is filed via the Cégkapu system each month. Throughout the process, records of hours, payslips, and tax documents must be kept. At year-end, final income tax reconciliation and annual wage reports are prepared. Efficient systems (often via payroll software or service providers) help manage these monthly tasks and keep accurate records.

‍

Step-by-Step Onboarding Process With an EOR in Hungary

Hiring in Hungary is a registry-driven, inspection-sensitive process. A compliant onboarding flow protects you from labour-office fines and court disputes.

‍

1. Confirm EOR Registration

Verify the EOR is registered with:

• National Tax and Customs Administration (NAV)
  
• Social security system
  
• Labour Inspectorate
  

Unregistered employers cannot legally pay salaries.

‍

2. Identify Work Location and Contract Type

EOR determines:

• Workplace location
  
• Full-time vs part-time
  
• Fixed-term legality
  

Wrong structure leads to claims.

‍

3. Validate Role and Working Time

EOR assesses:

• Minimum wage compliance
  
• Overtime rules
  
• Rest breaks
  
  

4. Structure Salary and Contributions

EOR validates:

• Gross salary in HUF
  
• Social security base
  
• Allowances
  
  

5. Provide Full Cost-to-Company Breakdown

Includes:

• Gross salary
  
• Employer social security
  
• EOR fee
  
  

6. Draft Hungary-Compliant Contract

Contract includes:

• Duties and title
  
• Salary and pay cycle
  
• Working hours
  
• Leave
  
• Notice period
  
  

7. Register Employee

EOR registers with:

• NAV
  
• Social security system
  
  

8. Set Up Policies

EOR issues:

• Working hours
  
• Leave and sickness
  
• Health and safety
  
• Disciplinary framework
  
  

9. Immigration Workflow (If Needed)

EOR manages:

• Residence permit
  
• Work authorization
  
  

10. First Payroll and Filings

EOR processes:

• Salary
  
• Tax and social security
  
• Payslip issuance
  
  

11. Ongoing Compliance and Termination

EOR manages:

• Salary changes
  
• Inspections
  
• Contract updates
  
• Termination process
  
• Court representation
  

Most Hungarian employer losses happen after termination.

‍

Build Your Hungary Team with Bolto EOR

Expanding into Hungary is not just about hiring, it is about handling labour inspections, insurance, and termination law correctly.

Bolto’s Employer of Record model absorbs:

• Labour Code complexity
  
• Tax and insurance exposure
  
• Payroll risk
  
• Termination and inspection exposure
  

So you can scale in Hungary without becoming a legal employer.

‍

Full Legal Employer Coverage in Hungary

Bolto becomes the legal employer before:

• National Tax and Customs Administration
  
• Social security authorities
  
• Labour Inspectorate
  
• Labour courts
  

Bolto manages:

• Contracts and compliance
  
• Payroll and statutory filings
  
• Leave and benefits
  
• Audit and inspection response
  
• Termination execution
  

You manage work. Bolto manages legal risk.

‍

Built for Fast Entry and Clean Exit

With Bolto EOR:

• Hire in weeks
  
• Avoid Hungarian company formation
  
• Skip tax and insurance registration
  
• Exit without liquidation
  
  

Transparent Cost Structure

Bolto provides:

• Salary and statutory breakdown
  
• Social security visibility
  
• Fixed EOR fees
  
  

End-to-End Employee Lifecycle Management

Bolto manages:

• Contract drafting
  
• Payroll and tax
  
• Social insurance
  
• Leave and benefits
  
• Discipline and termination
  
• Labour-court defense
  

You never deal directly with Hungarian labour authorities.

‍

Designed for Risk-Controlled Growth in Hungary

Hungary penalizes:

• Late insurance payments
  
• Missing contracts
  
• Invalid termination
  

Bolto enables growth without inheriting inspection and court risk.