What is a PEO?

A PEO is a professional employer organization.

Companies use a PEO service as a way to outsource their HR responsibilities. A PEO can manage a range of HR tasks, including sourcing, onboarding, benefits, and payroll.

As well as lightening your team’s HR workload, a PEO can help you to hire employees in Hungary and around the world.

That’s because a PEO can legally hire international members of staff on your behalf. They can also take responsibility for all tax and labor law compliance, ensuring you meet your statutory obligations and provide enticing packages for hard-to-reach talent too.

Want to start hiring and doing business in Hungary? Find out if a PEO in Hungary is right for your business by chatting to one of the Skuad team today.

What are the benefits of using a PEO provider in Hungary?

Hire the best Hungarian (and international) talent

When you’re building a stellar team, geography no longer has to get in the way.

With the help of tech and communication tools, you can manage and motivate a distributed team with ease.

And with the help of a PEO, you can hire talent living in any country, anywhere around the world, without worrying about payroll, tax compliance, and labor law logistics.

Become a globally competitive employer

Understanding what to offer your local employees in terms of salary and benefits is tricky enough. So how do you decide on a competitive package in countries you may never even have traveled to?

A PEO understands the local labor market in any given country. They can advise you, helping you to create salary and benefits packages sure to attract the very best local talent.

With the expertise of your PEO partners, you can become a competitive employer on the global stage.

Avoid setting up your own legal entity in Hungary

If you don’t want to use PEO services in Hungary, you have to set up your own legal entity in order to hire Hungarian talent.

This means registering as an international business and setting up a Hungarian subsidiary. It’s a complex process that requires a big investment in terms of both time and money.

You’ll need a team of lawyers. You’ll need an HR team – either locally or at home – with the knowledge to manage Hungarian payroll and labor law compliance. You’ll also need to make regular trips over to Hungary as you get things established.   

Choose a professional employer organization in Hungary, however, and you don’t need to do any of this.

A PEO like Skuad already has its own legal entity in Hungary. This means they can act as your employer of record in Hungary, legally hiring and paying Hungarian employees on your behalf.

Want to know more about how an EOR in Hungary works? Check out our handy EOR guide.

Gain insight into new markets

With Hungarian HR experts (thanks to your PEO partner) and your own local, Hungarian talent, you can really make the most of the opportunities presented by the Hungarian market.

Access to local knowledge means you get to supercharge your business efforts in Hungary. You get to know your local buyers and cultural quirks quickly, so you’ll find it easy to optimize your product and strategy.

Stay a step ahead of your competitors

When you work with a PEO, you get the edge over your competitors. You can:

Hire the very best global talent – local labor shortages needn’t affect the running of your business

Expand into new markets – with the help of your Hungarian team and their local market expertise

Save on unnecessary costs – keep international hiring costs under control, so you have more budget to spend elsewhere

Maintain your agility – with a PEO you can explore new markets whilst minimizing risk and maintaining your flexibility

Remain compliant

Tax requirements and employment laws in Hungary are complicated. There’s a lot to learn if you’re new to working and hiring in the country.

Unfortunately for those on the learning curve, there are strict fines and penalties for non-compliance.

This is another thing a PEO can help with. A PEO service takes responsibility for all labor law and tax compliance on a company’s behalf. Their expert team will keep you updated on your responsibilities at every stage of the HR and payroll process.

Here are just a few of the things they’ll be able to tell you about payroll and labor law in Hungary:

Payroll in Hungary

• The local currency in Hungary is the Forint (HUF).  
• The minimum wage in Hungary is 200,000 HUF (around $540) for unskilled workers and 260,000 HUF (around $702) for skilled workers. Minimum wages may vary depending upon collective bargaining agreements.
• Employees in Hungary are paid on a monthly basis, usually on the last day of the month and no later than the 10 day of the following month.
• A 13 month bonus isn’t mandatory in Hungary but a performance-based bonus is common.
• The standard working week is 40 hours over five days. Overtime is paid at a rate of 150% of the basic salary, rising to 200% for overtime worked on weekends or public holidays.

Hungary tax rates and contributions

Employee tax contributions

In Hungary, income tax is payable at one flat fee rate of 15% for all employees over the age of 25.

Employee payroll contributions

Employees make payroll contributions of 18.5%.

These contributions are comprised of 7% for health care, 10% for their pension fund and 1.5% to cover an unemployment fund.

Employer payroll contributions

Employers contribute 13% of an employee’s salary to cover a social contribution tax.

Hungary corporate tax rate

In Hungary, the corporate tax rate is 9% which is one of the 20 lowest rates in the world.  

Paid leave in Hungary

There are 11 paid public holidays in Hungary.

Annual leave: Employees in Hungary are entitled to at least 20 days’ paid holiday per year. This allowance increases with age, reaching 30 days’ paid leave when an employee is 45 years old.

Sick leave: Employees are entitled to 15 days’ paid sick leave. This is paid by the employer at a rate of 70% of the usual salary.  

Maternity leave: Women are entitled to 24 weeks’ maternity leave, paid at 70% of the usual salary.

Paternity leave: Fathers are entitled to 5 days of paid paternity leave following the birth of a child. They can also take unpaid leave until the child reaches 3 years of age.

Parental leave: One parent can take additional parental leave until their child is two years old. This leave is paid at 70% of the usual salary, capped at twice the minimum wage.   

Employees with children under the age of 16 also get extra annual leave. They can take two extra days when they have one child, four extra days for two children, and seven extra days for three children.  

Other types of leave: Employees can also take additional leave for mandatory medical examinations, donate blood, attend mandatory court proceedings, and upon the death of a relative.  

Skuad can take care of all employment law and tax compliance – so you don’t have to. Book a platform demo to find out more.

What does it cost to build a team in Hungary?

When you want to start operating as an international business in Hungary, there are two routes you can take. The cost of building your Hungarian team will depend upon which of these two options you go for.

Company incorporation in Hungary

This first option is popular with large enterprises. That’s because, in Hungary, company registration costs can quickly spiral, making a big budget essential.

When setting up a business in Hungary, you have to factor in costs such as:

• legal fees
• travel costs
• office space costs
• banking costs
• HR training costs

Partnering with a PEO in Hungary

When you choose a PEO service in Hungary, you get to build a Hungarian team at a fraction of the cost of company incorporation.

Prices vary across PEO providers and packages. But here at Skuad, we like to keep things simple with a flat fee payment structure.

Our prices start from $199 per employee per month, which includes

• Employer of record services
• Payroll, benefits, and onboarding management
• 100% labor law compliance
• Free global payments

Skuad clients get their first hire for free and can start hiring in Hungary within just a few days of signing up to our service.  

Ready to start onboarding and paying employees in Hungary? Schedule a Skuad demo to see our platform in action.