Summary

Hungary’s social security system covers health, retirement benefits and unemployment insurance.

Current market practice is generally to try to avoid becoming liable to Hungarian social security due to its high cost.

Details

Contributions

Employer Contributions are 13% of total income, and employee contributions are 18.5% uncapped. Social taxes may also be payable on non-employment income, such as capital gains and dividends if an individuals’ total income is low.

Treaties

Hungary has social security agreements with all European Economic Area countries and almost 20 non EEA countries including the US, Canada, Australia, India and Japan. These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. Most inbounds expatriates to Hungary therefore continue to pay home country social security rather than Hungary contributions.

Given the comparatively high cost of Hungarian social insurance, the vast majority of inbound expatriates obtain a certificate of coverage for the maximum period (up to five years for most countries, but only two years from the UK).

Exemptions

Nationals from non-EU/non agreement countries seconded to Hungary by a foreign employer not registered in Hungary are not required to participate in the Hungarian social security system. This exemption applies for two years, extendable to three years.

Administration

Contributions to the various branches of social security were unified in 2020 and as such the administration associated with paying contribution is not overly complex. There are no individual choices in relation to the core social security system – all contributions are made to the National Tax and Customs office (NAV).

Benefits

There is a 20 year qualifying period for Hungarian state retirement benefits but these are low and few foreigners claim them. Basic medical care is, either through paying Hungarian contributions or participating in an agreement country’s social security system, generally free of charge. Unemployment benefit is available to those paying Hungarian contributions or covered under EU regulations, but benefits are low.

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