How to Employ Foreign Workers in Hungary?
How to Employ Foreign Workers in Hungary: A Complete Business Owner’s Guide
As the Hungarian economy becomes increasingly integrated into the global labor market, more and more local businesses are recognizing that hiring foreign workers is not just an opportunity but, in many cases, a necessity. Whether you’re looking for highly skilled professionals in IT or engineering, or seeking reliable manual labor, international recruitment is fast becoming essential for maintaining competitiveness.
However, employing foreign nationals in Hungary involves strict legal, tax, and administrative requirements that every company must comply with. In this article, we explain in detail what obligations and opportunities you should be aware of when hiring foreign workers for your Hungarian company.
Why It Makes Sense to Hire Foreign Workers
Labor shortages continue to grow in Hungary, especially in sectors such as manufacturing, logistics, construction, IT, and healthcare. The domestic labor pool is limited, prompting more companies to turn to international hiring to fill vacant roles.
Hiring foreign employees enables you to:
- Access qualified professionals or manual workers more quickly
- Bring new skills and perspectives into your company
- Support multi-shift or international operations
- Increase productivity and workforce stability
Who Counts as a Foreign Employee?
Legally speaking, anyone who is not a Hungarian citizen is considered a foreign employee. The regulations make a distinction between two main groups:
- Citizens of EU/EEA Member States and Switzerland – these individuals do not require a work permit to work in Hungary. However, they must register their residence and obtain a Hungarian tax number and social security number (TAJ).
- Third-country nationals – this category includes citizens of countries like Ukraine, Serbia, India, Vietnam, and the Philippines. Employing these workers requires a combined residence and work permit (commonly known as a “single permit”), which must be obtained through the Immigration Office (OIF).
In most cases, the employer or a staffing agency handles the application process, which typically takes between 30 and 60 days.
What Tax Regulations Apply to Foreign Employees?
Foreign employees who have an official Hungarian employment contract and work location are generally subject to the same tax obligations as Hungarian citizens.
The key payroll taxes are:
- 15% Personal Income Tax (PIT) – deducted from the employee’s gross salary
- 18.5% Social Security Contribution – also deducted from the employee’s gross salary
- 13% Social Contribution Tax – paid by the employer
It’s important to note that if a foreign worker spends more than 183 days in Hungary and has a permanent residence or employment here, they become a Hungarian tax resident.
Hungary has signed double taxation treaties with many countries to ensure that income is not taxed twice. However, applying these treaties correctly can be complex, and professional tax advice is strongly recommended, especially in cases involving higher salaries or long-term stays.
Legal and Administrative Requirements
Hiring foreign workers—especially third-country nationals—comes with several administrative responsibilities. As the employer, you are required to:
- Prepare a legally compliant employment contract
- Submit the necessary permit applications to the Immigration Office
- Register the employee with the tax and social security authorities
- Apply for a tax ID and TAJ number
- Ensure the employee completes a medical fitness examination
- If needed, provide accommodation and support integration efforts
Failure to comply with any of these obligations may result in serious fines and legal consequences for both the employer and the employee.
Workforce Leasing: A Simpler Alternative
Many Hungarian companies—particularly in manufacturing, construction, and logistics—opt for workforce leasing (outsourcing) when hiring foreign employees.
In this model, a staffing agency is the official employer and handles all legal, administrative, and immigration-related tasks. The workers, however, carry out their duties at your company’s site under your supervision.
While this solution can be more expensive on an hourly basis, it reduces legal and administrative risks significantly.
Supporting the Integration of Foreign Employees
Long-term success in employing foreign workers depends not only on hiring them but also on helping them integrate into your company culture.
We recommend:
- Assisting with accommodation
- Helping them obtain required documents (e.g. TAJ number, tax ID, bank account)
- Providing basic language assistance or translation services
- Organizing onboarding sessions and cultural orientation
- Supporting long-term residency or family reunification if applicable
Proper integration support increases employee satisfaction, reduces turnover, and improves overall productivity.
Conclusion: A Strategic Advantage, If Done Right
Hiring foreign workers in Hungary can offer a significant strategic advantage, especially in industries struggling with labor shortages.
But to make the most of this opportunity, businesses must ensure compliance with all legal, tax, and administrative requirements while also providing meaningful integration support. Poorly managed recruitment processes can result in penalties and reputational risks, while well-planned approaches can lead to long-term growth and stability.
How FirmaX Hungary Can Help
FirmaX Hungary offers comprehensive support for companies hiring foreign employees in Hungary. Our experienced team can assist with:
- Work and residence permit applications
- Tax and social security registration
- Full administrative support
- Partnering with licensed workforce leasing agencies
- Legal consultation and compliance checks
