Minimum wage in Hungary increases

By in ,
176
Minimum wage in Hungary increases

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)
MonthlyHUF 167,400HUF 219,000
WeeklyHUF 38,490HUF 50,350
DailyHUF 7,700HUF 10,070
HourlyHUF 963HUF 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 wageMinimum guaranteed salary
Gross salaryHUF 167,400HUF 219,000
Cost borne by employee  
Income tax (15%)HUF 25,110HUF 32,850
Social security contribution (18.5%)HUF 30,969HUF 40,515
Net salaryHUF 111,321HUF 145,635
Cost borne by employer  
Social contribution tax or “szocho” (15.5%)HUF 25,947HUF 33,945
Vocational training levy (1.5%)HUF 2,511HUF 3,285
Total payroll costHUF 195,858HUF 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.