29th June 2018
Hungary certainly has a reputation for culture and innovation: the Rubik’s cube, digital computing and electric motors were all invented there and an impressive 13 Hungarians have won Nobel prizes. The country’s economy is also currently on a growth path: its volume of GDP increased by 4.7% in the first quarter 2018 and it is enjoying outstanding trade performance. As a result, optimistic businesses have upped their hiring, causing the number of job vacancies to accelerate for five consecutive quarters, with a huge year-on-year increase of 33% in the first quarter of 2018.
It comes a no surprise, then, that Hungary is proving to be particularly attractive to contractors. There’s strong demand for professionals in the manufacturing industry with analysis showing that two thirds of businesses in the field are lacking skilled labour, particularly those operating in the dynamic automotive arena. The healthcare sector also has a high number of unfilled jobs. While the government is making them increasingly attractive by raising the wages of doctors, nurses and other health service professionals, not to mention modernising hospitals, there remains a need for support from interim staff. There are also ample opportunities for individuals working in areas related to the country’s unprecedented volume of imports, such as trade services.
Contracting in Hungary: the legal bit
There’s no doubt that Hungary presents exciting prospects for contractors but there are a number of things that you need to know about working there before taking up a placement.
For instance, only non-EU nationals will need a work permit in order to take up a position. And, prior to your arrival in the country, you’ll need to register your residence. This needs to be filed one to two weeks before just in case there are delays in the registration process, so it is important to factor this into timescales.
Contractors also need to provide a ‘seat address’ where official letters regarding residence registration can be sent to, but this must not be the same address as the place that you are going to live. The location of this seat will also determine the local rules for the municipal tax that you have to pay, so we would strongly advise that you seek professional advice before confirming your chosen address.
In order to set up a private entrepreneur company, you’ll need to go to any government office in person. Assisted third-party applications, such as under a power of attorney, are no longer allowed.
It is also important to be aware that, before you start generating income in Hungary, you’ll need to register with the National Tax and Customs Administration of Hungary (NAV). This will generate a tax identification code and card. However, if you register at the Documents Office as an individual entrepreneur, this registration will automatically be taken care of.
There are various types of tax in Hungary and it can be quite complex. For contractors, it is worth knowing that the Hungarian government offers the KATA Small Business Tax scheme for individual entrepreneurs which simplifies matters. For a flat lump sum, you’ll be released from the obligation to pay corporation and personal income tax. In addition, you won’t have to make any of the following contributions: social security, employment, pension, healthcare or vocational.
It is certainly clear that the rules for working in Hungary can be difficult to navigate. As such, we strongly advise that contractors seek advice from a specialist international contractor management company.
Contact the 6CATS team today.