How to Employ Foreign Workers in Hungary?

Why is Employing Foreign Workers Worthwhile?

Hiring foreign employees can bring certain challenges: special regulations apply to their employment, and cultural differences in a multinational workplace can occasionally lead to conflicts. However, the advantages of employing foreign workers far outweigh the potential risks, and with proper management, companies can reap many benefits from their employment.

Skilled Workforce

Employing foreign workers opens access to the global labor market, expanding opportunities beyond domestic talent. Foreign employees often possess valuable skills, capabilities, and qualifications that may be scarce in the local labor market. This is especially true for foreign students, who are typically multilingual, making them highly valuable in international business relations or customer service roles.

Building International Connections

International connections are crucial for companies entering the global market. Employing foreign workers provides a unique opportunity to leverage their networks in their home countries, facilitating entry into new markets. They can offer valuable insights into local market conditions, customer needs, and branding strategies, improving the company's image and presence in international markets.

Diverse Work Environment

A diverse workforce introduces new perspectives, enhancing the company’s ability to adapt to changes in the economic and market environment, thereby improving competitiveness. Foreign employees bring knowledge of consumer preferences and business practices from other cultural backgrounds, broadening the company's horizons. Diversity fosters creativity and problem-solving skills, making the organization more appealing to clients and partners alike.

Tolerant Workplace Culture

Employing workers from different cultures fosters acceptance and understanding, positively influencing the workplace atmosphere. Embracing diversity strengthens employees’ sense of inclusion and belonging, boosting commitment and contributing to corporate social responsibility goals.

Regulations for Employing Foreign Students

Currently, thousands of international students study in Hungary, representing a motivated, agile, and skilled resource for companies. Let’s explore the key regulations for employing foreign students.

EU/EEA Citizens and Third-Country Students

All EU citizens have the right to free movement and residence, allowing them to work in Hungary under the same conditions as local citizens. This also applies to citizens of Iceland, Liechtenstein, Norway, and Switzerland (collectively referred to as EEA citizens).

Third-country students, on the other hand, are those who fall outside the scope of EEA citizens.

Employers must report the employment of third-country students to the relevant district office (labor department of the government office) within five working days after the start of employment.

Y Diák Iskolaszövetkezet handles this reporting, so partners don’t need to worry about it.

Working Hour Restrictions

According to current legislation, third-country nationals with study-related residence permits or student mobility permits may work:

• During the academic term: Up to 30 hours per week.
• Outside the academic term: Full-time for up to 90 days per year.

For example, during summer breaks, students can work full-time until the next academic term, provided their residence permit is valid during that period.

Required Documentation

Employers must ensure that the student has a Hungarian tax identification number, which is necessary for reporting. This can be requested even with a foreign address, and the student does not need the physical tax card—just proof of the tax number is sufficient.

For membership in a student cooperative, the following are required:

• A valid Hungarian student ID (studying in Hungary or within the EU).
• Active or passive student status until the age of 25.
• Hungarian tax number.
• Hungarian bank account.

Legal and Tax Obligations

Employment Types

Foreign students can be employed under regular employment contracts, subject to the restrictions outlined above. In this case, the same tax rules apply as for local employees, including social insurance and income tax obligations.

Other work arrangements, such as contract-based or freelance work, are also possible and taxable. However, such arrangements allow for expense deductions under Hungarian tax law.

Simplified Employment

Foreign workers can be employed under simplified arrangements, adhering to the following conditions:

• Maximum of 5 consecutive days,
• Up to 15 days in a calendar month, and
• Up to 90 days in a calendar year.

Internships

Internships are a popular option for multinational companies employing foreign students. When working through Y Diák Iskolaszövetkezet, foreign students above the age of 25 are subject to a 15% income tax deduction. For those under 25, this deduction applies only if their earnings exceed the monthly tax-free allowance.

Eligibility for Tax Benefits

Students under 25 years old, including those with foreign tax residency, can claim a youth tax allowance if:

• They do not claim a similar benefit in another country for the same period, and
• At least 75% of their total income is taxed in Hungary.

A declaration form provided by Hungary’s tax authority (NAV) is required for claiming this benefit.

Leverage Y Diák Iskolaszövetkezet’s Quality Services

At Y Diák, we select the most suitable candidates for each position based on our clients’ needs. Whether it’s for temporary work, short-term assignments, or long-term collaboration, the workers we recommend offer reliable and effective solutions to address labor shortages.

For foreign workers, we handle recruitment, onboarding, and all administrative tasks, including reporting obligations and compliance with labor and tax regulations. This allows our clients to focus on training and organizing the work of their new employees. Contact us today for a personalized offer!