Salaries and Payroll Taxes in 2018, Hungary

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Each year, regulations are adjusted to meet the new conditions of the changing world. In 2018 again, Hungarian payroll taxes and salaries have been modified. Just like last year, the minimum wage has been increased, while the employer’s payroll taxes decreased.

Since the minimum wage increased, make sure the salaries of your employees are still above it!

Minimum wage raised

A minimum wage is the lowest amount of compensations employers may legally pay to workers. There are two main types of minimum wage, based on the requirement of the position your employee fills.

1. Minimum wage is what those employees must receive whose job does not require any specific skills. This will be raised by 8%, from gross HUF 127,500 to gross HUF 138,000 as of 1^st January 2018.
2. Guaranteed minimum salary is what those employees must receive whose position requires at least secondary education. This will be raised by 12%, from gross HUF 161,000 to gross HUF 180,500 as of 1^st January 2018.

Please note that the gross salary must be modified in the employment contracts as of 1st January. If you need any kind of assistance in the process, including a need for a contract modification template, please contact us.

Payroll costs lowered

In order to compensate the companies for the raise in the minimum wage, the payroll costs (which are paid on top of the gross salary) will be decreased from 23,5% to 21% starting from 2018.

The costs of the employer this way increase only by HUF 9,518 (6,04%).

The costs of the employer this way increase only by HUF 19,570 (9,84%).

Changes for employees on wages higher than the minimum

If you pay your employees more than the minimum wage (HUF 138,000) or the guaranteed minimum salary (HUF 180,500), payroll taxes in 2018 will bring you some benefits. A company’s payroll costs build up from the gross salary, and the payroll tax that needs to be paid by the company on top of that. In 2017 this was 23,5%, but from 2018 it will decrease to 21%.

Your company can either make some savings or it may use this tax deduction as an opportunity to motivate the employees by increasing their salaries.

Changes for managing directors who pay minimum contributions

The Hungarian minimum wage will increase to HUF 138,000, and the guaranteed minimum salary to HUF 180,500 as of 1^st January 2018. The managing director’s salary or the base of the minimum contributions also follow this increase. While the tax base increases, the company’s payroll tax will also decrease from 23,5% to 21%.

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 2018, and modify their labor contract
• If the salary of your employee is above the compulsory minimum, you may use the savings from the lowered taxes to raise their salary. That also requires a labor contract modification.

If there is any change in the salary of any of your employees, discuss this with your accountant or payroll specialist.

If you are interested in the details, contact your English speaking accountant and we will send you a detailed breakdown. Not our client yet? Learn more about our accounting and finance services here, or call our office on +36-1-317-8570 to ask for a free initial consultation. You may also send a letter to info@helpers.hu.

You might also want to check out our salary calculator, to see how much each employee will cost you.

Go to the salary calculator now!

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