The termination of the family tax allowance might even lead one to conclude that eligibility for healthcare coverage ends immediately when a student relationship is terminated. However, the regulation is far more nuanced than that. Whether a young person continues their studies, starts working, or suspends their studies may significantly affect when they become liable to pay the health service contribution.

Below, we summarise the most important information for graduating students regarding eligibility for healthcare coverage, the role of student card validity, and the rules governing the payment of the health service contribution in Hungary.

What is the health service contribution?

As its name suggests, the health service contribution serves to finance healthcare services. It covers, among other things, medical treatment available under the social security system, prescription medicines subsidised by social security, medical aids and devices, and patient transport services. In everyday terms, this is commonly referred to as free medical treatment.

On what basis is a student entitled to healthcare coverage?

In Hungary, in certain cases, the costs of healthcare services for students are financed by the central government budget. These include:

• students participating in full-time primary and secondary education or studying under a full-time educational schedule;
• students pursuing studies within a full-time higher education programme, provided they are adult Hungarian citizens or recognised refugees or beneficiaries of subsidiary protection;
• foreign students in higher education institutions, meaning foreign nationals who have established a student status on the basis of an international agreement or a scholarship awarded by the minister responsible for education; and
• students covered by the Act on Hungarians living in neighbouring countries, who have a student status in a higher education institution within a state-funded programme or a programme supported by a Hungarian state (partial) scholarship in full-time education.

How long does healthcare coverage remain available after studies are completed?

Unlike the family allowance and the family tax allowance, eligibility for healthcare coverage (that is, free medical services) is linked not to the end of the academic year but to the validity of the student card.

For graduating students in Hungary, the student card remains valid until 31 October following the termination of student status. Following that, eligibility for healthcare coverage continues for an additional 45 days, provided that the student relationship existed continuously for at least 45 days before its termination.

When must the health service contribution be paid?

If an adult student who previously studied full-time

• does not continue their studies,
• does not take up employment that establishes insured status, and
• is not entitled to healthcare coverage on any other basis, for example as a socially disadvantaged person,

then they become liable to pay the health service contribution from the 46th day after the expiry of their student card, that is, from 16 December. This year, the health service contribution amounts to HUF 12,300 per month, or HUF 410 per day.

A special case applies where a higher education student suspends their studies and takes a passive semester. In this situation, no health service contribution must be paid, provided that eligibility for a student card remains active and the validation sticker has not expired.

What needs to be done to pay the contribution?

Former students do not need to submit any notification regarding the contribution payment obligation. The Hungarian tax authority (NAV), based on data provided by the Hungarian Health Security Fund Administration, automatically records the payment obligation.

It is also possible for another person or organisation – such as a parent or local municipality – to pay the health service contribution on behalf of the former student, subject to the student’s consent and NAV approval.

If a private individual fails to pay the contribution, and the outstanding debt exceeds six times the monthly amount of the health service contribution, they may not use healthcare services free of charge, except for emergency treatment.

Reviewing eligibility and proper timing are key considerations

While parents of graduating children lose eligibility for the family tax allowance within a relatively short period, free healthcare coverage continues for a longer period. The obligation to pay the health service contribution becomes relevant in December, and the first payment must be made by 12 January 2027.

Applying social security regulations to specific employees and keeping up with their continuous changes can create a significant administrative burden for HR and payroll departments. Our experts provide support in the legally compliant operation of payroll, social security, and labour administration processes. Contact us and learn more about our social security administration services.

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Does the end of secondary school mean the end of the tax allowance?

The entitlement to the family tax allowance available to parents for a graduating child generally ends at the conclusion of the school year. Therefore, both parents and employers should be aware of the eligibility conditions and the necessary administrative obligations.

This entitlement is often taken for granted during the year. However, in certain situations, a lack of attention may result in disadvantages. In this article, we summarise the most important information.

Pursuant to Sections 29/A (1)-(6) of Act CXVII of 1995 on Personal Income Tax in Hungary, the family tax allowance (including the family contribution allowance) is generally available to a parent for as long as they are entitled to family allowance (educational and/or schooling support) in respect of their child.

How long are parents entitled to family allowance and schooling support?

Under Section 8 of Act LXXXIV of 1998 on the Support of Families in Hungary, parents are entitled to schooling support provided as part of the family allowance after the end of compulsory schooling, as long as the child continues studies in a public education or vocational training institution. Entitlement continues until the last day of the school year in which the child reaches the age of 20, or 23 in the case of a student with special educational needs who is not eligible for disability benefits under the Hungarian Act on the Rights of Persons with Disabilities and the Promotion of Their Equal Opportunities.

Based on the above, entitlement to family allowance ends after the month in which the child obtains a secondary school leaving certificate (matura) or acquires a vocational qualification in full-time public education.

When does the family tax allowance for a graduating child end?

Since entitlement to the family tax allowance is linked to family allowance, the family tax allowance can no longer be claimed once entitlement to family allowance ceases.

It is important to note that the last day of teaching is not the same as the last day of the school year, and this date may vary by institution. It is therefore advisable to inquire with the relevant school:

• If the last day of the school year falls on 1 July, entitlement to family allowance and the family tax allowance remains in place for July.
• If the school year ends on 30 June, the benefit is no longer available for the following month.

What action must parents take?

Educational institutions report the completion of secondary school studies to the Family Support and Social Security Department of the Hungarian Government Office, therefore parents receive an official decision regarding the termination of family allowance entitlement.

If a parent has claimed the family tax allowance for a graduating child, he / she has to report the termination of eligibility to his / her employer. The amended advance tax declaration must include the previous data and indicate that the affected child should no longer be taken into account either as dependent child eligible for the allowance or simply as dependant when applying the family tax allowance.

IMPORTANT! If the declaration relating to the family tax allowance is not amended and the parent claims the credit without being eligible, tax arrears will accrue. If the result is a payment obligation exceeding HUF 10,000 in the tax return, 12% of the payment liability will have to be paid as a penalty together with the tax arrears.

Continuing studies at a public education or vocational training institution

If the graduating child resumes studies in September in a full-time public education institution or vocational training institution under a student relationship, the parent becomes entitled again to family allowance and the family tax allowance. The entitlement remains in place until the end of the school year in which the child reaches the age of 20, or 23 in the case of a student with special educational needs.

Importantly, neither family allowance nor the family tax allowance is automatically reinstated in this case; a new application must be submitted for the child concerned.

Application process:

• Family allowance can be claimed from the Hungarian Government Office. If the application is submitted in September, the amount is granted retroactively for July and August as well.
• The family tax allowance can be requested again through the employer. However, for July and August it can only be claimed retroactively on an individual basis during the 2027 personal income tax settlement.

Continuing studies in full-time higher education

If the child continues their studies in a full-time higher education institution, parents are not entitled to family allowance in respect of that child. However, if the parent registers the child as a dependant with the Hungarian Government Office, the family will not be entitled to family allowance for that child, but may receive a higher amount of family allowance for the other dependants, i.e. the other children being raised in the family.

In this case, the child studying in higher education may also be taken into account again for the purposes of the family tax allowance, but only when determining the number of dependants. The declaration relating to the family tax allowance must therefore be amended accordingly.

Overall, the family tax allowance for a graduating child depends on the status of the student relationship and the entitlement to family allowance. Therefore, it is important for both parents and employers in Hungary to monitor the date on which eligibility ends and/or resumes.

The application of rules relating to the family tax allowance and other family support benefits for individual employees, as well as the continuous changes to those rules in Hungary, may impose a significant administrative burden on HR and payroll departments. Our experts provide support in ensuring payroll, social security and employment processes remain compliant with legal requirements. Contact us to learn more about our payroll services.

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Can an employment contract be concluded directly with a foreign company?

A Hungarian employee may, of course, conclude an employment contract with a foreign company; there are no prohibiting regulations in this regard. However, it is important to ensure that Hungarian public levies associated with the employment are paid correctly and on time. In such specific cases, reporting, payroll processing, and taxation differ from the standard practices applicable to Hungarian employers, as the foreign employer does not qualify as a payer in Hungary.

From the employee’s perspective, the following aspects should be considered:

• Is the individual a Hungarian citizen?
• Is the work primarily performed in Hungary?
• Does the individual have a Hungarian address?
• Are their economic and personal ties connected to Hungary, i.e. is their centre of vital interests in Hungary?
• Do they qualify as a Hungarian tax resident?
• Are they subject to Hungarian social security regulations?

What should foreign employers consider?

From the employer’s perspective, the primary question is whether employing a Hungarian worker creates a permanent establishment (PE) in Hungary for tax purposes. This goes beyond payroll considerations, as it requires analysing the provisions of the applicable double taxation treaty between the two countries. If a tax presence or even a legal entity establishment obligation arises, additional administrative tasks and costs may burden the employer in connection with its Hungarian operations.

Even if no permanent establishment is created, Hungarian personal income tax advances and social security contributions must still be paid in Hungary on the employment income of the Hungarian employee. To determine this, all relevant circumstances of employment must be assessed based on:

• the applicable double taxation treaty,
• other international agreements, e.g. the EU Coordination Regulation (EC) No. 883/2004, and
• bilateral social security agreements.

How can tax and contribution obligations be declared?

There are two options for declaring taxable income, social contribution tax, and contributions:

• General rule: The foreign employer applies for a technical tax number prior to employment in order to pay the Hungarian employee’s social security contributions (Section 87 of the Social Security Act). This tax number is strictly limited to this purpose.

• Alternative solution: The foreign employer agrees with the Hungarian employee that the employee receives a grossed-up salary (including employer contributions), from which the employee pays personal income tax advances and social security contributions to the Hungarian tax authority and files the related returns under their own tax number.

Which form should be used?

Form 2608INT is used to declare social contribution tax (13%), and social security contributions (18.5%) and for the self-revision of them. This form applies to foreign companies without Hungarian registration and their employees. The return must be submitted monthly, by the 12^th day of the month following the reporting period, electronically via the Hungarian e-administration system. Payment obligations must also be fulfilled by this deadline. Please note that this form is not used for employee registration or personal income tax (15%). For personal income tax, the individual must pay quarterly tax advances and file an annual tax return.

Who pays any potential penalties?

If the foreign company fails to register the employee, the employee is responsible for fulfilling reporting, contribution payments, and tax returns related to social security coverage. The employee also bears the legal consequences of non-compliance, except for default penalties and tax penalties, which do not apply to them.

To ensure compliance with regulations, we recommend involving both a tax adviser and a payroll specialist when designing the administrative framework. WTS Klient Hungary’s tax consulting and payroll services business lines have extensive experience in handling such employment structures.

A Foreign employer – Hungarian employee: Who pays what and to whom? bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

However, Government Decree No. 92/2026 (VI. 5.), published in the Hungarian Gazette, presents a more nuanced picture. Although the regulation indeed introduces significant restrictions, the employment of third-country nationals in Hungary is not being entirely abolished. The precise interpretation of the amendment may therefore be particularly important for affected employers.

What changed as of 5 June 2026?

Under the new regulation, as of 5 June 2026 the possibility of issuing guest worker residence permits has ceased, as the government has not designated any third countries whose citizens may be employed in Hungary under this legal title.

Does this really amount to a complete ban?

At first glance, the amendment may appear to constitute a general prohibition. In reality, however, it is rather the termination of a previously preferred employment channel.

In recent years, the guest worker legal status primarily served as a mechanism enabling temporary employment agencies and larger employers to bring significant numbers of third-country nationals to Hungary.

Accordingly, the primary objective of the current restriction is rather to limit mass, organised labour inflows, instead of fully eliminating all forms of foreign employment in Hungary.

What is not affected by the amendment?

It is particularly important to emphasise that the legislation does not entirely eliminate the possibility of employing third-country nationals in Hungary.

The amendment does not affect:

• permit types other than the guest worker residence permit,
• guest worker residence permits already valid on 5 June 2026,
• the extension and reissuance of such permits,
• as well as procedures already pending on 5 June 2026 regarding the issuance of guest worker residence permits.

In these cases, the rules applicable prior to the amendment must continue to be applied.

What does this mean for employers?

The current change therefore does not mean the abolition of the entire system, but rather the closure of the employment channel that previously ensured the largest-scale inflow of guest workers into Hungary.

At the same time, other elements of the regulatory framework continue to operate, meaning that in certain cases alternative permit options may still remain available for third-country nationals.

For employers, it may therefore be particularly important to:

• review their current employment structures,
• assess their existing permit portfolio,
• examine alternative residence and employment titles,
• and closely monitor expected future legislative changes.

The payroll and HR services team of WTS Klient Hungary, together with the legal experts of WTS Legal Hungary, are ready to assist with the interpretation of regulations regarding the employment of third-country nationals, the selection of the most appropriate permit types, and the comprehensive support of permit procedures.

A Guest worker stop in Hungary? bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

This is exactly what our 22-page English-language publication – Employing People in Hungary – aims to support. It offers a comprehensive and accessible overview of the most important aspects of the Hungarian employment and tax environment.

What’s inside the publication?

The brochure guides readers step by step from the beginning of the employment relationship to the taxation of personal income. It provides detailed insights into key areas, including:

• Registration and labour contract: An outline of the administrative steps required to establish an employment relationship in Hungary, including the mandatory elements of a valid employment contract.
  
• Working time and holidays: Clarifies rules on working hours, overtime, holiday entitlement and national holidays – including both basic and additional holiday entitlements available to employees.
  
• Minimum wage: An overview of current regulations on the minimum wage and guaranteed wage minimum, along with their tax implications.
  
• Social security and taxation: Employment in Hungary entails various contribution obligations. The publication explains these in detail, helping employers understand their responsibilities regarding social security and health insurance contributions. From determining tax residency and calculating the tax base, to understanding tax allowances and tax-base allowances, our publication walks through the full scope of personal income taxation. Special attention is given to capital income and cryptocurrency taxation, tax allowances for families and individuals, tax rates and tax returns.

The contents of the brochure are regularly reviewed and updated by our tax advisory professionals, ensuring that it always reflects the latest legal environment. More than just a theoretical summary, the publication provides practical guidance, examples and checklists for immediate application.

Employing People in Hungary is available for download via the link below or by clicking on the image. Should you have any questions or need tailored advice, our experienced tax advisory team is happy to assist – whether you’re employing a single person or operating a full Hungarian subsidiary.

EMPLOYING PEOPLE IN HUNGARY 2025 – A useful summary from tax experts of WTS Klient (PDF)

A Employing People in Hungary 2025 is now available bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.