Salaries and Payroll Taxes in 2019, Hungary
For the latest information pertaining to H2 2019, click here.
Hungarian payroll taxes and salaries were modified the end of December, but they are already valid for January. Following the same trend as last year, the minimum wage has been increased, while the employer’s payroll taxes remained the same.
Since the minimum wage increased, make sure the salaries of your employees are still above it!
Minimum wage raised again
The minimum wage is the lowest amount of compensations you as an employer may legally pay to your workers. In Hungary, there are two main types of minimum wage depending on what level of education is required to fill the position.
- Minimum wage: paid to employees whose jobs do not require any specific skills. This will be raised by 7.97%, from gross HUF 138,000 to gross HUF 149,000 as of 1st January 2019.
- Guaranteed minimum salary: paid to employees whose positions require at least secondary education. This will be raised by 8.03%, from gross HUF 180,500 to gross HUF 195,000 as of 1st January 2019.
If the salary of your employee is raised according to the above, the gross salary must be modified in the employment contracts as of 1st January. Need assistance? Or a contract modification template? Just contact us!
Payroll costs stay the same
While companies are required to raise in the minimum wage of their employees, the payroll costs (which are paid on top of the gross salary) will remain 21% in 2019.
| Minimum wage |
2018 |
2019 |
| Gross salary: |
138,000 |
149,000 |
| Company’s payroll tax: |
28,980 |
31,290 |
| Total cost: |
166,980 |
180,290 |
The costs of the employer this way increase only by HUF 13,310.
| Guaranteed minimum salary |
2018 |
2019 |
| Gross salary: |
180,500 |
195,000 |
| Company’s payroll tax: |
37,905 |
40,950 |
| Total cost: |
218,405 |
235,950 |
The costs of the employer this way increase only by HUF 17,545.
No changes for employees on wages higher than the minimum
If you pay your employees more than the minimum wage (HUF 149,000) or the guaranteed minimum salary (HUF 195,000), payroll taxes in 2019 will bring you no changes. A company’s payroll costs build up from the gross salary, and the Employer’s payroll tax that needs to be paid by the company on top of the gross salary. In 2018 this was 21%, and in 2019 it remains the same.
| Salary |
2018 and 2019 |
| Gross salary: |
200,000 |
| Company’s payroll tax: |
42,000 |
| Total cost: |
242,000 |
Changes for company owners who pay minimum contributions
The Hungarian minimum wage will increase to HUF 149,000, and the guaranteed minimum salary to HUF 195,000 as of 1st January 2019. The base of the minimum contributions paid by the company owners (who are managing directors or contribute to the company’s activity in other ways) also follow this increase. Since the tax base increases, your contributions will increase too.
When calculating contributions for the managing director, the main question is whether they perform only managing tasks or also tasks related to delivering the services or goods provided by the company. Since company management as such does not require specific skills as defined by law, it might be enough to pay contributions based on the minimum wage. Other involvement in the company’s activity may require contribution payments based on the guaranteed minimum salary. (You can learn more about taking salary as a managing director here.)
What to do?
- Make sure that the salaries of all employees of your Hungarian company are above the guaranteed / minimum wage.
- If the salary of one of your employee is lower than the compulsory minimum, raise it starting from January 2019, AND modify their labor contract
- If the salary of your employee is above the compulsory minimum, you have nothing to do – unless you wish to raise their salary anyway, as it is customary at the beginning of the new year.
Make sure to always discuss it with your accountant or payroll specialist if there is any change in the salary of any of your employees.
Want to learn more? Then contact your English speaking accountant and we will send you a detailed breakdown. Not our client yet? Fill out the form below or discover our accounting and finance services here, or call our office on +36-1-317-8570 to ask for a free initial consultation.
You might also want to check out our salary calculator, to see how much each employee will cost you.
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