Offering unparalleled flexibility, cost-effectiveness, and access to skilled remote workers, registering as a foreign employer in Hungary is an option worth considering for many foreign-owned businesses.
Thinking about registering as a foreign employer in Hungary? Here is what you need to know, and how Leinonen tax, payroll, and accounting experts can help.
What Does Registering as a Foreign Employer Mean?
When you register as a foreign employer in Hungary, you will be free to hire Hungarian employees without needing to set up an entity in the country. With remote work remaining popular across the EU since the COVID-19 pandemic, this is an attractive, flexible, and cost-effective opportunity for many foreign-owned businesses.
How do you Register as a Foreign Employer in Hungary?
Foreign employers need to register with the tax authority in Hungary. Upon registration, you will receive a Hungarian tax number to use for employee filings, payroll, and tax returns. Registration requires submitting NAV Form T201, along with:
- a certified extract from the foreign company register (with Hungarian translation),
- a specimen signature,
- proof of foreign tax residence,
- and a Power of Attorney if an agent (such as Leinonen) acts on the employer’s behalf.
Upon approval, NAV issues a Hungarian technical tax number, which is mandatory for payroll, social security reporting, and employee registration.
You should aim to submit registration documents and obtain your tax number to register employees before work starts. However, this can be done retroactively if required (within limits). This can be useful, as it often takes a few weeks for the tax number to be issued after registration documents are submitted.
Is Registration Always Required?
In limited cases, a foreign employer may hire a Hungarian tax‑resident individual without registering in Hungary. In such situations, tax and social security obligations are transferred directly to the employee by law.
The employee must independently declare and pay social security contributions on a monthly basis and personal income tax advances (typically quarterly) directly to the Hungarian Tax Authority (NAV).
This setup is administratively burdensome, increases compliance risk for the employee, and is generally discouraged in practice, which is why most foreign employers choose to register in Hungary or use a local payroll provider.
What Responsibilities do Foreign Employers in Hungary Have?
Foreign employers in Hungary operate under the same conditions as domestic ones. They must electronically submit registrations and tax returns in the same way as locals.
Benefits of Working With Leinonen as a Foreign Employer in Hungary
Leinonen Hungary will handle everything on your behalf, from policies and drafts to registration and ongoing documentation. Leinonen’s competent local accounting experts will also take care of your payroll in Hungary. With our trusted support, you can also save time and money by employing workers directly, without needing to use an Employer of Record (EOR).
In Summary, Working With Leinonen Hungary Will Grant you:
- Simplicity. We will handle the technicalities of managing registration, tax and payroll in Hungary, granting you the peace of mind that you are staying compliant with local regulations.
- Cost-effectiveness. Registering as a foreign employer means significant savings on costs associated with opening a local entity. With our support, you will also be able to hire and manage employees directly (without using an EOR).
- Flexibility. Registering as a foreign employer is much more flexible than setting up your own entity, making it a great choice for finding Hungarian talent for short-term projects.
- Business Support Network. Connect with recruiters, learn the latest health and safety regulations and more with access to our exclusive business support network.
- Local Experts. Our consultants are true local experts in tax, accounting, and payroll in Hungary, and will offer the impartial advice and expertise you deserve.
Are There any Downsides to Registering as a Foreign Employer in Hungary?
As with most things, it does not come completely without risk. Registering as a foreign employer in Hungary is only possible if you do not set up a permanent establishment, which could result in issues like reduced brand visibility and recognition in Hungary.
The best option depends on the specifics of your business, and it is wise to seek personalised advice on this. As a general rule, if your business creates value in Hungary, setting up a permanent establishment may be a better option. On the flipside, if value is created outside of Hungary, registering as a foreign employer could be more beneficial.
Arrange a Consultation with a Leinonen Expert Today
Leinonen Hungary has been supporting foreign-owned businesses for more than a decade. As local experts in tax, accounting, and payroll, we can make registering and operating as a foreign employer in Hungary simple. With our specialist support, your company can save both money and time, while also ensuring proper regulatory compliance.
To find out how we could make registering as a foreign employer in Hungary a breeze for your business, arrange a consultation with one of our experts today.
