How to fulfil social security contribution and social contribution tax payment obligations from 1 January 2020 for foreign businesses (undertakings) not required to register under Hungarian law?
This information note is for foreign businesses (employers) not required to register under Hungarian law which have employees
In the social insurance system natural persons shall also qualify as insured persons who perform their work for a foreign employer outside the territory of Hungary and are subject to the Hungarian social insurance system based on the regulation of the European Community on the coordination of social security systems or of a bilateral agreement on social security concluded by Hungary.
Foreign businesses not required to register under Hungarian law (hereinafter referred to as foreign businesses) shall perform any reporting, social contribution payment, social contribution tax payment and filing obligations related to a legal relationship involving an insurance obligation through a financial representative or a tax agent (hereinafter commonly referred to as representative), or in the lack of any representative, directly themselves.
If the foreign business concerned does not have a representative and has an employer who is ensured under Hungarian law, they shall, prior to the insurance period and the commencement of the employment, contact the National Tax and Customs Administration of Hungary (hereinafter: authority or NTCA) and request its registration by the authority as an employer.
I. Registration with NTCA
The foreign business shall meet its registration obligation by requesting a tax number by filling in and submitting form 20T201INT. The form may be found through a search function on the following page: http://www.nav.gov.hu " Nyomtatványkitöltő programok " Nyomtatványkitöltő programok " Egyszerű keresés/Összetett keresés.
Via this form, the foreign business concerned can also inform the authority of the data of the person authorised to perform electronic administration on behalf of the foreign business.
If the foreign business employing an ensured person does not have a representative for meeting the tax and contribution obligations and, in addition, fails to register as an employer, it is the natural person employed by this foreign business who shall perform the reporting, social contribution payment, social contribution tax payment and filing obligations related to his/her insured status.
Whether or not the foreign business has registered with the authority as an employer can be enquired under the menu item “Databases, taxpayer query, other organisations” on the following link: http://nav.gov.hu/nav/adatbazisok/adatbleker/egyebszerv/egyeb_szervezetek_egyszeru
The employee is required to have a tax identification number which is necessary for – among others – the compliance with the obligations burdening the employer. Natural persons can request a tax identification number by submitting to the authority a form no. 20T34, prior to the registration of the employment or the performance of the contribution payment obligation. The form is available through the following link: http://nav.gov.hu/nav/letoltesek/nyomtatvanykitolto_programok.
II. Reporting ensured persons employed by foreign businesses with the authority
The commencement of the employee’s insurance obligation must be reported on the first day of the insurance period at the latest; the termination of the insurance or periods without work performance obligation or income subject to social security must be reported within 8 days. Form 20T1041INT, through which first reporting or change reporting can be made, may be downloaded from the following link:
III. Fulfilment of contribution payment obligation
Income belonging to the contribution base that is paid to an employee performing work for a foreign business within the framework of a legal relationship subject to insurance obligation, shall be subject to the payment of a pension contribution of 10 percentage, and a health insurance and labour market contribution of 8,5 percentage, both to be assessed and withheld by the employer.
Pursuant to PIT, the following, among others, shall qualify as income belonging to the contribution base: the part of the income from employment or self-employment constituting the consolidated tax base considered for calculating the tax advance base or, lacking that, i.e. if the income is non-taxable in Hungary, the base salary specified in the employment contract or if the work is performed in the framework of another legal relationship established for labour, or on the basis of an employment contract under the effect of a foreign jurisdiction, the monthly fee specified in the contract.
It is thus 18.5% of the income belonging to the contribution base that is to be paid to cover pension, health insurance and unemployment benefits.
IV. Social contribution tax payment obligation
On the basis of Act LII of 2018 on Social Contribution Tax (hereinafter referred to as SCT) payers shall have, in accordance with their obligation to contribute to the financing of common societal needs, social contribution tax payment obligation.
Persons without a permanent residence, habitual residence or a seat in Hungary shall also qualify as payers (taxpayers) (hereinafter referred to as: foreign payers) if natural persons having a tax payment relationship with these payers, who are under rules and regulations pertaining to Hungarian social security legislation perform their work in Hungary or on the territory of any other Member State subject to the regulation of the European Community on the coordination of social security systems or of any other state subject to a bilateral agreement on social security concluded by Hungary.
If the foreign payer fails to meet their legal obligations, it is the natural persons having a legal relationship with the foreign payer that generates tax payment obligation who shall meet the related tax obligations.
Meeting the tax payment obligation
As a main rule, payers shall pay 17,5%, social contribution tax for the tax base but are granted the opportunity by the law to reduce the amount of the tax payable by the amount of the tax incentives they are entitled to.
The base of social contribution tax
Part of the revenue shall be qualified as the base of the social contribution tax, that is taxable under the PIT Act, from self-employment or employment relationship, allotted or paid by the payer to the natural person having a legal relationship with the payer that generates a taxation obligation, and that is considered under the provisions of the PIT Act for the calculation of the tax advance base.
In the lack of such remuneration (allotted income), i.e. if the income is not taxable in Hungary, the base of the social contribution tax shall be the base salary or other payment specified in an employment contract or other contract governing the employment relationship or other legal relationship that results in the obligation to pay tax.
The income that is paid (allotted) with respect to a period in which an insurance relation exists on the basis of the SSC irrespective of the time of payment (allotment) shall also be part of the tax base.
V. Filing a return (declaration) and payment
The declaration and data reporting obligation related to the insurance, contribution payment and social contribution tax payment obligations shall be performed electronically on a monthly basis, by the 12th day of the month following the subject month.
Form 2008INT to be used for filing declarations (returns) can be downloaded from the following link:
When a foreign enterprise realizes a tax incentive deductible from social contribution tax, the tax return form 2008 is to be submitted instead of the 2008INT and all obligations related to the employee are to be indicated on that form. That is to say, besides the social contribution tax and the realizable tax incentive, the pension contribution, health insurance and labour market contribution to be deducted from the employee are also to be declared on the tax return form 2008.
Contribution payment shall be made in one lump sum to the account of NTCA called “Külföldi vállalkozásnál biztosítási kötelezettséggel járó jogviszonyban foglalkoztatott utáni járulék befizetések beszedési számla” (“For contributions for employees employed by foreign businesses in a legal relationship involving insurance obligation”) No. 10032000-06056456, while the social contribution tax shall be paid to the NTCA account “Szociális hozzájárulási adó beszedési számla” (“Social contribution tax account”) No. 10032000-06055912, on a monthly basis, by the 12th day of the month following the subject month, by transfer or bill payment. If the foreign enterprise realizes a tax incentive from the amount of the social contribution tax, the payment is not made in one single amount, but separately for each tax type in accordance with the contents of the return form 2008. For example, the pension contribution will be declared under the tax type code 291 on the return form 2008; and therefore, the payment must be made to the NTCA account “Nyugdíjbiztosítási Alapot megillető bevételek magánszemélyt, őstermelőt, egyéni vállalkozót, kifizetőt terhelő kötelezettség beszedési számla” (“For revenues due to the Pension Insurance Fund collected from private individuals, primary producers, private entrepreneurs and payers”).
If payment is made by bank transfer, please enter the tax identification number that you received when registering under the section “Notes to beneficiary” of the transfer order. This is necessary so as to ensure that the payment be duly credited to the account.
VI. Electronic administration
The declaration and data provision obligations related to the contribution and social contribution tax payment obligation shall be performed on the Government Portal (http://www.magyarorszag.hu/szuf).
So that you can file your declaration or provide data electronically you need to have prior registration. Registration must be performed by the private individual who will submit the declarations and the data to be provided to the authority. This private individual shall personally visit the organ entitled to carry out Client Gate registration, where, after presenting their personal identification document, filling in a Registration Data Sheet and providing a user name and an existing e-mail address, they shall be given an activation code for a single use.
Registration may be initiated personally be opened at any Metropolitan or County office of the Government Office (One Stop Shop of Government), county and Budapest districts at document offices, at the customer services of the Hungarian National Tax and Customs Administration, at the customer services of Magyar Posta Zrt. (Hungarian Post) as well as at the diplomatic and consular missions of Hungary, whereas in an electronic way, Client Gate may be opened only in the possession of a valid identity card issued after 1 January 2016.
National Tax and Customs Administration
 Under special rules, allotments not directly related to employment (e.g. dividends) may also be regarded as the base of social contribution tax. In case of such a payment (allotment), please consult the authority for information on your exact liabilities.