Hungary is a popular tourist destination in central Europe. The country has a population close to 10 million, and its landlocked location makes it great for forming business relationships with other Central European countries. Although it’s great to focus on these benefits during an expansion, you’ll still need to work on more challenging tasks such as setting up your Hungary payroll.
As a global PEO, we understand the difficulties of an expansion, and we mitigate them through our suite of global expansion services. We offer Hungary payroll outsourcing for companies looking to expand without the hassle of setting up their own payroll. Plus, we handle all elements of compliance and local labor laws, so you can put your time and energy into running your company.
Taxation Rules for Payroll
Employers must make the right tax contributions to stay compliant. For example, the statutory social security contribution for employers is 27% of gross salary, while employees contribute 9.5% for social security and 7.5% for health insurance and labor market contribution. The 9.5% social security contribution for employees gets capped at 7,453,300 HUF gross salary.
As an employer, you also have to pay a flat corporate income tax of 19%. If your profits don’t exceed 500 million HUF, you’ll pay 10% instead. Employees pay income tax of 15% regardless of their income level.
Hungary Payroll Options
Generally, you have four different Hungary payroll options:
- Internal: Not many companies can choose to run internal payroll because it requires a larger budget, staff, and knowledge of local labor laws. However, this payroll process may be an option for larger companies looking to work in Hungary for a while.
- Remote: A remote payroll is when you add your subsidiary’s employees to your parent company’s payroll in another country. Doing so will streamline paying all your employees, but different countries will have varying tax and employment laws to follow.
- Hungary payroll processing company: You can also work with a local Hungary payroll processing company that will take care of outsourcing your payroll, but you’ll still have to worry about meeting all of the country’s compliance laws.
- Hungary payroll outsourcing: Your final option is Hungary payroll outsourcing with a global PEO such as Globalization Partners. When you work with us, you won’t have to set up your payroll or worry about compliance.
What Do You Need to Set up Payroll?
Companies need an established subsidiary before they can set up their Hungary payroll. However, it can take anywhere from a couple of weeks to a few months to incorporate, causing you to lose candidates you want to hire along with potential business partnerships. Globalization Partners will act as the Employer of Record using our existing Hungary subsidiary, so you won’t have to establish your own entity to run payroll and start working.
Necessary Entitlement and Termination Terms
Creating entitlement and termination terms as part of an employment contract before you choose a Hungary payroll option can help you stay compliant. Both the employer and employee must provide a notice period of at least 30 days but no more than a year. Employees are entitled to severance pay if you terminate the employment by ordinary termination.
Contact Globalization Partners Today
Globalization Partners will help you expand quickly and easily through Hungary payroll outsourcing. Contact us today for more information.