The following article provides a rough guide on the taxation of salaries in Hungary. Learn about income and social security taxes, health coverage and pension contributions.
In Hungary, there is a flat tax system, that is, taxes are a fixed proportion of income. As of 2017, the rate of income tax is 15%.
As a foreign employee you are obliged to pay income tax in Hungary even if you receive your salary from abroad. In case of permanent residence (that means staying in Hungary for more than 183 days a year) you have to pay tax on all income. In the case of temporary residence, tax has to be paid only on the income received in Hungary.
It is not necessary to pay Health Care payroll tax for people who do not receive a salary in Hungary. In this case, it is advisable to hold private health insurance. If you do not have cover you’ll have to pay for each and any medical treatment you require when in Hungary.
As long as you pay payroll tax in Hungary, you will be issued a Social Security card which entitles you to public medical treatment. In this case it is advisable to also apply for the European Health Insurance Card (which you become eligible for as soon as you start paying social security contributions under the Hungarian system). The EU Health Card entitles you to free emergency treatment in all European countries.
As of 2017, social security contributions are paid by both employers and employees. Employers pay 22% of the gross monthly salary (above the employees' salary, which won't be impacted), while employees pay the follow amounts:
The base of the monthly contributions is the employee’s income. The Hungarian social insurance system contains the following elements:
Who is covered?
The social insurance pension system provides retirement benefits to the insured in the case of:
The amount of the pension you will receive depends on the approved service time and the amount of the average monthly earnings. In Hungary there are some special advantages for elderly people, such as free public transport (for people over 65 years of age) and lower entrance fees in museums, libraries, cinemas, public swimming pools etc.
Private pension funds can offer a supplementary pension, you may find this necessary to consider, especially if you aim to retire in a country with a higher cost-of-living than Hungary. Anybody who pays in a monthly amount will receive a supplementary monthly pension. Participation in a private pension is not obligatory; it is optional and up to each individual to decide if they want it, which company to use and how much to contribute.