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Essential Information on Taxes and Contributions for Student Employment
"Two things are certain in life: death and taxes." / Einstein / In 2019, approximately 300,000 students took up work in Hungary, with 60,000 working during the summer, according to the Secretary-General of the National Association of Student Enterprises in Hungary.
More importantly, more than half of these student workers, around 180,000, were employed through school cooperatives. This is not surprising, as we have long known that this is the most ideal way to arrange contracts from both the employer's and the employee's perspective.
In our newsletter to our partners, we have often written about the advantages of working with the Y Generation School Cooperative: our partners always get the best workforce, as our professional leaders have been in the student employment sector for over a decade, and we continuously advertise, recruit, and select to ensure quality labor.
This week, we will show the tax advantages of partnering with a school cooperative for student employment.
Y Generation School Cooperative Professionally Assists Partners in Acquiring Excellent Student Workers
Student Employment During Study Periods
Minors who are at least 16 years old can take up student employment with parental consent. During school holidays, including spring, winter, autumn, and ski breaks, students aged 15 and above can work. Those under 18 cannot work overtime or at night, but in special cases, such as cultural, artistic, sports, or advertising activities, students under 16 can also work during the school year with prior permission from the guardian authority.
Students over 18 can take up student jobs alongside their studies if they are full-time students with active student status. If a student has a passive student status, they can work until the age of 25 at most.
Let's Get to the Point: Taxation!
Taxation of Employment through School Cooperatives
Working through a school cooperative is very popular and common. This is mainly because, although income earned from student work is taxable—except for a few employment forms—it is not subject to the same extent of tax and contribution obligations as regular employment.
If the contract is not directly between the student and the employer but through a school cooperative, no social security contributions are deducted from the income, and the student is not considered insured. However, they are still entitled to healthcare services until their eligibility for a student card expires.
Advantages for Both Students and Employers When Contracting Through a School Cooperative
The established contract must always be in writing, and the salary must be agreed upon in advance, which cannot be less than the current minimum hourly wage. In 2020, this was HUF 926 gross per hour.
Earnings from working as a member of a school cooperative fall under the category of income from dependent activities. The school cooperative deducts and pays 15% personal income tax to the NAV (National Tax and Customs Administration of Hungary). Yes, you read that right, you don’t have to worry about this either!
