Summer is here, which means a substantial number of students are entering the labor market for the next few months. Just as well, since various industry sectors are in need of the surplus, such as hospitality and agriculture. But how is student work taxed in Hungary, and how can your Hungarian company employ students?
Student work in Hungary
In Hungary, you can find student workers from the age of 15. Minors (those under 18) can work only in school breaks – which of course includes the summer break. College students are allowed to work all year round, but many of them prefer focusing on their studies during study terms, which means they come out to play only in summer.
Foreign students living in Hungary with a study permit are also allowed to work in Hungary. However, the number of working hours for them is limited. They can also take advantage of tax benefits available to young taxpayers if at least 75% of their income is generated in Hungary, and if they are not receiving a similar benefit in any other country; they just need to make a statement of this before applying for the tax benefit.
Employment options and taxes on student work
The most obvious benefit of employing students is that persons under 25 years do not pay the 15% personal income tax, independent of the employment structure. This way you as an employer can offer them better wages beside lower costs to your Hungarian company.
This rule has only one limitation: the tax base must remain below HUF 433,700 / month. If you pay your student worker more, the part above the limit will be taxed. However, most student workers are paid well below that, mainly because they do not work full time, so it will probably not apply in your case.
In the below list, personal income tax is not listed because it is not relevant for most students. If your student worker is above 25, the personal income tax will of course apply.
Student work organizations
Most students in Hungary are employed through student organizations. These organizations act as an intermediary and a job agency between employers and students, coordinate communication, and handle payments and administration. They make student work more transparent, and they provide added benefits to all parties:
- A student employed through an organization does not have to pay social security contribution (18.5%).
- The employer does not have to pay the social contribution tax (13%).
The payment made to the student organization must be at least 117.8% of what the student will receive from them to cover costs, while students should receive at least the hourly net minimum wage.
If a student works in employment, the employer will deduct the social security contribution (18.5%) from their wage, while they also have to pay the social contribution tax (13%). As a result, this form of employment is much less popular in student work.
Student work is sometimes performed through agency contracts, especially if it is on a project basis. In such cases,
- Students’ tax base can be reduced by 10% for “expenses”.
- Students must pay contributions only if their fee exceeds 30% of the monthly minimum wage or HUF 2,000 daily.
- The employer must pay social contribution tax.
Sectors where simplified employment is typical include agriculture and the film industry. Here the same rules apply to student work as to any other work:
- Work is limited to at most 5 days in a row, 15 days / month, and 90 days / year.
- The student will receive their net pay, while the employer pays a daily contribution of HUF 500 / 1,000 / 4,000, depending on the sector.
- The wage must be proportionately at least 85% of the minimum wage or 87% of the guaranteed minimum salary.
- Please note: a movie extra cannot receive more than HUF 18,000 net / day.
Student work at your Hungarian company
Do you need part-time workers in just a few hours each week, or on an ad hoc basis? Student work might be an ideal solution for you. Your Hungarian company gets a part-time employee while saving on taxes, and a student gains experience that will promote their career. And who knows, after they complete their studies, they may end up as your full-time employees, already trained for the job!
To start the procedure, contact a student work organization, describe what you need, and let them find you the ideal students for the job. When considering employing student work, make sure you also discuss the topic with your accountant. Helpers Finance has plenty of experience with employing students through student work organizations, which you can also benefit from when you are working with us.