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Hungarian employees abroad, expats in Hungary

Hungarian employees abroad, expats in Hungary

Hungarian employees abroad, expats in Hungary

 

Based on the experience of recent years, more and more Hungarian employees work for foreign employers, and foreigners often move to Hungary for various reasons. In the coming weeks, we will be publishing a series of newsletters detailing different aspects of this type of employment. Without claiming to be exhaustive, we will cover the rules on teleworking from abroad, examine the responsibilities of the foreign employer when hiring a Hungarian employee, present country-specific case studies, etc.

In today's introductory newsletter, we set out the issues that we usually consider when our Hungarian clients hire employees abroad or our foreign clients hire employees in Hungary.    

  

Events such as a foreign business negotiation, conference, short study trip or trips within a group of companies occur in the life of almost every company. These are also typically considered postings, which a company should prepare well in advance for from a tax and social security perspective.

In addition, during the coronavirus pandemic, the number of employees working remotely from Hungary for their foreign employers has also increased.

There are a lot of related issues that need to be clarified if the work takes place for a shorter or longer period in another country:

  • In which country is the personal income tax payable on employment?
  • What happens to the social security insurance relationship?
  • Is it necessary to request any kind of proof from the authorities (proof of tax residency, proof of social security insurance)?
  • What benefits does the employer/host company wish to grant to the employee (per diem, housing allowance, health and accident insurance, company car, company phone, etc), which country taxes them and how? Is it possible to grant a benefit tax-free in the host country?
  • Is a work permit required?
  • What are the duties and obligations of the foreign employer and the employee?
  • What kind of employment contract/posting contract is required?
  • Should the labour law provisions of the host country be taken into account (e.g., minimum wage, mandatory breaks, rules on holidays)? How much risk do companies take if they do not comply?

In the event that a change of country takes place within the European Union, the issues to be clarified are well regulated in Community law, but their interpretation is not always easy. Even unique, more complex solutions may be needed in the third national context.

With informed planning, and the involvement of an expert, any tax and social security risks associated with working across borders can be completely eliminated or significantly reduced. To this end, VGD Hungary renders a full scope of services, with our partner companies in Nexia, the global network of consultancy firms providing all the necessary support in understanding the provisions of national law and in completing the required administrative tasks. 

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Should you have any questions regarding this newsletter,
the tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute tax advice.

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