Workforce Payments Guide Hungary

Last updated: Dec 18, 2023

Currency
Forint (HUF)
Payroll Frequency
Monthly
Capital
Budapest
Fiscal Year
1 January- 31 December
Employer Taxes
13.00%
Employee Costs
18.5%
Central Bank
Magyar Nemzeti Bank (MNB)
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3rd Party Payments

Authority payments such as the Social Contribution Tax and Value Added Tax (VAT) have specific deadlines. The Social Contribution Tax, which includes tax returns on personal income and social contributions paid by the employer, is due by the 12th day of the following month and annually by December 20.

Similarly, the Value Added Tax (VAT) payment is also due by December 20.

These payments are crucial for compliance and contribute to the broader social and economic infrastructure.

Payments Coverage

Papaya Global supports payments, with potential local requirements in Hungary.

Contractor Payments

Papaya Global supports payments to contractors in Hungary. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. it is advised for contractors to reach out to their bank to confirm how foreign currencies are handled

KYC

In Hungary, companies are required to perform a Know Your Customer (KYC) process. This process is part of the regulations that aim to prevent money laundering, financing of terrorism, and other financial crimes. Here are some key points about the KYC process:

Identity Verification: The company needs to verify the identity of its clients. This can be done by checking national identity cards, passports, resident permits, or other identifying documents for natural persons. For companies, a certificate of public registration, such as a commercial register or a partnership agreement, and identification of partners may be required.

Business Operations: The company should clearly understand its client’s business operations. This includes understanding the names of the company’s directors, business addresses, national insurance or social security numbers, company numbers, and so on.

Risk Assessment: The company should assess the risk associated with the client. This includes understanding the nature of the client’s business, the source of funds, and the expected pattern and level of transactions.

Ongoing Monitoring: The company should continuously monitor the business relationship, including scrutiny of transactions undertaken throughout the relationship to ensure that the transactions being conducted are consistent with the company’s knowledge of the customer.

IBAN

IBAN Example Hungary HU62131000072526117879824257
IBAN in print HU62 1310 0007 2526 1178 7982 4257
Country Code HU
Digit Code 62
Bank Code 131
Bank Account Number 72526117879824257

anking Regulations

Several banking laws and regulations influence cross-border workforce payments.

Correspondent Banking: Correspondent banking refers to formal agreements or relationships between banks to provide payment services for each other. It plays a crucial role in effectuating cross-border payments. The value of global cross-border payments is estimated to increase significantly, and correspondent banking represents a significant portion of this.

Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Controls: Correspondent banks may bear liability, regulatory, and reputational risk for AML-CTF violations by the respondent banks. This has led to a phenomenon known as “de-risking,” where some banks shed their correspondent banking relationships with smaller banks, often in emerging markets viewed as “high-risk” for AML.

Bank Account Opening

To open a company bank account in Hungary, ensure you have the following:

Company Documents:

  •   Notarized copies of the charter (translated into Hungarian)
  •   Copy of the company registration certificate
  •   Deed of Foundation/Articles of Association

Identification:

  • A valid passport
  • Proof of Hungarian residence (address card, residence card, or proof of address abroad)

Proof of Employment/Earnings:

  • Some banks may require documents showing employment or earnings

Additional Documents:

  • A utility bill for name and address confirmation
  • Documents related to the shareholder/beneficiary (good standing, CV, certificate from the bank)

Note:

  • The account opening process typically takes up to eight working days after registration, varying by bank and individual circumstances.
  • The company owner must be present in person for the bank account opening.

International Banks

Several major foreign banks operate in Hungary. Here are some of them:

  • OTP Bank: OTP Bank was established in 1949 and has the largest branch presence in Hungary.
  • K&H Bank: K&H Bank is part of KBC Group (Belgium).
  • Erste Bank
  • UniCredit Bank
  • Raiffeisen Bank
  • CitiBank
  • Deutsche Bank

Major Local Banks

Several major local banks operate in Hungary. Here are some of them:

  • Budapest Bank
  • CIB Bank
  • MKB Bank
  • FHB Bank

Payment Tools

Cash: Cash is still the most popular payment method in Hungary.

Credit and Debit Cards: Credit and debit cards are widely used for online and in-person transactions.

Bank Transfers: Bank transfers are also commonly used for B2C transactions.

E-Wallets: E-wallets, such as PayPal, are gaining popularity in Hungary.

Mobile Payments: Mobile payment providers, like Mobiano, are also popular for B2C transactions.

Stripe: Stripe is a comprehensive payment infrastructure for the internet that is available in Hungary.

Cryptocurrency

In Hungary, cryptocurrencies do not have the status of legal tender, and no specific laws regulate their use.

However, entities providing exchange services between virtual and fiat currencies or different virtual currencies, as well as custodian wallet providers, must adhere to the Hungarian AML Act (Act LIII of 2017), which focuses on preventing and combating money laundering and terrorist financing.

While financial services regulations don’t govern cryptocurrencies and non-fungible tokens (NFTs), security tokens might fall under these regulations as securities if they securitize certain rights.

Consequently, some security token offerings (STOs) might qualify as securities within Hungary. Individuals must pay a 15 percent uniform personal income tax on profits from trading and mining cryptocurrencies. They can deduct costs related to these activities, including mining machinery, electricity bills, or exchange fees, from their taxable profits.

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