The recent changes to regulations have increased the minimum wage in Hungary by 4%. The guaranteed minimum salary, another type of minimum pay, has also grown by the same amount. In this blog post, we explain how this affects your accounting.
Minimum wage and guaranteed minimum salary
In Hungary, the lowest monthly pay of any employee is determined by the minimum wage and the guaranteed minimum salary. If their job does not require any qualification, they must be paid at least the minimum wage. If their job requires secondary education or higher, they cannot earn less than the minimum guaranteed salary. The table below includes the increased values for both.
| Minimum wage (gross) | Minimum guaranteed salary (gross) | |
| Monthly | HUF 167,400 | HUF 219,000 |
| Weekly | HUF 38,490 | HUF 50,350 |
| Daily | HUF 7,700 | HUF 10,070 |
| Hourly | HUF 963 | HUF 1,259 |
How does this affect your company in Hungary?
The changes to minimum wage in Hungary, effective from 1 February 2021, may also affect payroll costs if you have employees at minimum wage or minimum guaranteed salary. The most important figures are included in the following table. For more detailed calculations, you can try our salary calculator here.
| Minimum wage | Minimum guaranteed salary | |
| Gross salary | HUF 167,400 | HUF 219,000 |
| Cost borne by employee | ||
| Income tax (15%) | HUF 25,110 | HUF 32,850 |
| Social security contribution (18.5%) | HUF 30,969 | HUF 40,515 |
| Net salary | HUF 111,321 | HUF 145,635 |
| Cost borne by employer | ||
| Social contribution tax or “szocho” (15.5%) | HUF 25,947 | HUF 33,945 |
| Vocational training levy (1.5%) | HUF 2,511 | HUF 3,285 |
| Total payroll cost | HUF 195,858 | HUF 256,230 |
As a result, the monthly payroll cost is up by HUF 7,488 for the minimum wage and HUF 9,828 for the minimum guaranteed salary. On a yearly basis, this amounts to HUF 89,856 and HUF 117,936 respectively.
How does this affect benefits and payroll taxes?
The upper limit of social contribution tax, the amount of social contribution tax deduction and the base of income tax relief are calculated for the year. As such, they are tied to the minimum wage effective on 1 January. Therefore, they remain unchanged for 2021.
By contrast, other payroll taxes are calculated for the month and are tied to the minimum wage effective on the first day of the given month. Therefore, they have increased starting from February. These are: the lower limit of social security contribution (both for employees and agents), social contribution tax and vocational training levy.
The minimum wage in Hungary is expected to increase further this year. If you would like to know more, contact your English-speaking accountant at Helpers Finance for a detailed breakdown. You can learn more about our accounting services here. You can ask for a consultation by calling our office on +36 1 215 0712, or by e-mailing info@helpersfinance.hu.
