A significant part of the amendments concerns the coordination of unemployment, family and long-term care benefits. For employers, however, the changes to the rules on postings and business trips, as well as the procedures related to A1 certificates, are also of major practical importance.

The new rules are not yet in force: for the regulation to become official, it must be published in the Official Journal of the European Union.

Postings and the 24-month period

The amendment maintains the basic principle that an employee or self-employed person posted to another Member State for up to 24 months may, as a general rule, continue to remain subject to the social security legislation of the sending Member State, provided that the person is not replacing another posted individual.

Article 12 of Regulation (EC) No 883/2004 has already excluded the application of the posting rules to an employee sent to replace another person. The amendment, however, provides more detailed rules for the treatment of successive postings.

If the originally posted individual does not complete the work carried out in another Member State and is replaced by another person, the legislation of the sending State may continue to apply only if:

• the aggregate duration of the work performed by the persons concerned does not exceed 24 months, and
• the other conditions of the posting are also fulfilled.

Practical significance: the 24‑month time limit will have to be assessed not only on an individual basis but, where relevant, collectively in respect of persons successively posted to perform the same work or activity.

Three-month prior connection with the sending state

One important element of the reform is the strengthening of the requirement for a prior connection with the sending Member State.

According to the amended Article 14(1) of Regulation (EC) No 987/2009, a person whose employment relationship was established specifically for the purpose of being posted to another Member State may also be posted, provided that, immediately before the start of employment, the person had already been subject for at least three months to the legislation of the Member State in which the employer is established.

For self-employed persons, the amended Article 14(3) introduces a similar requirement: the person concerned must have carried out their activity for at least three months in the Member State of establishment before wishing to rely on the posting rules under Article 12.

Two-month “cooling-off” period for repeated postings

The amendment also introduces a clarifying rule regarding the repeated use of posting arrangements.

If an employee or self-employed person has carried out activities in another Member State for a total period of 24 months – with interruptions of no more than two months – then, with respect to the same person and the same Member State, the posting rules may only be applied again after at least two months have elapsed from the end of the previous period of activity.

Naturally, in special circumstances it will remain possible to obtain approval for derogations from the general rules through a specific agreement.

Practical significance: after the expiry of the 24‑month posting period, a new posting period for the same individual cannot be started immediately in the same Member State; as a general rule, an interruption of at least two months will be required.

Business trip and short-term activities: long-awaited exemptions from the A1 procedure

One particularly welcome practical innovation of the amendment is the introduction of the concept of a “business trip”, exempting certain short-term activities abroad from the prior notification requirement and the obligation to apply for an A1 certificate.

A business trip means a time-limited activity connected to the business interests of the employer or self-employed person, such as participation in:

• a business meeting,
• a conference,
• a seminar,
• training.

However, the following do not qualify as a business trip:

• provision of services,
• transport of goods.

According to the draft, as a general rule, it would not be necessary to apply for an A1 certificate in advance for:

• a business trip; and
• short-term activities whose total duration within a period of 30 consecutive days does not exceed three consecutive working days.

It is important to note, however, that in the case of construction activities, the short duration alone does not create an exemption: the prior notification and A1 certificate application requirements would continue to apply.

The exemption is therefore not automatic for all short-term work performed abroad. It must be examined whether:

• the activity genuinely qualifies as a business trip,
• the activity does not constitute the provision of services or the transport of goods,
• the activity does not fall within the scope of construction activities.

A1 certificate: technical clarification of the procedure

With regard to A1 certificates, the amendment is primarily technical in nature, but it would introduce a clarification that is particularly useful in practice.

In the case of a posting, the employer (or, in the case of a self-employed person, the person concerned) would have the following obligations before the activity begins:

• foreign work activity would have to be reported to the competent institution,
• the issuance of an A1 certificate would have to be requested.

Practical significance: before the start of the posting, at least the A1 application would have to be submitted. If the certificate is not issued immediately, the competent institution would provide an automatic acknowledgement of receipt confirming that the procedure is in progress.

Not a complete overhaul, but substantial changes

The planned amendments do not fundamentally transform the posting system, but they introduce several clarifications and new procedural elements that may bring significant practical changes. For employers, the following changes may be particularly important:

• the requirement of a three-month prior connection,
• the aggregation of the 24-month time limit,
• the exemptions from the A1 procedure for business trips and very short-term activities.

It will be interesting to see how quickly the authorities of the Member States – including the Hungarian authorities – will be able to adapt to the new provisions and what practical solutions they will introduce.

The team of WTS Klient Hungary has specialised expertise in the field of expat taxation and social security obligations. Our goal is to ensure that the tax payment and tax return process for posted employees is carried out smoothly and accurately despite its potential complexity. We assist with issues related to business trips, postings and A1 certificates. Feel free to contact our experts.

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Why Is the Pay Transparency Directive necessary?

According to the to the reasoning of the directive, women in the EU earn on average 13% less than their male counterparts. That gender pay gap has largely stagnated over the past decade. This disparity is not only unjust but also distorts economic efficiency. The directive’s core objective is to increase pay transparency, thereby reducing unjustified gender pay gaps.

What are employers’ obligations under the Pay Transparency Directive?

The directive imposes significant new responsibilities on employers, including:

• Mandatory pay gap reporting: One of the directive’s central elements is the obligation to report on gender pay differences. Companies will be required to regularly disclose gender pay gap data, depending on their size. If a pay gap of more than 5% exists within the same role and cannot be justified by objective, gender-neutral criteria, employers must conduct a pay assessment and develop an action plan to reduce the gap. Importantly, “pay” includes not only base salary but also bonuses, allowances, benefits in kind, and even study leave entitlements.

• Transparency in recruitment: Employers will be required to inform job applicants of the pay range for the advertised position during the selection process. At the same time, it will be prohibited to ask candidates about their current or past salary.

• Pay transparency in internal communication: Employers must clearly communicate the criteria used to determine pay levels and progression. Employees will have the right to request information on how their salary compares to the average pay of colleagues performing equal or equivalent work. Perhaps most significantly, employers will no longer be allowed to prohibit employees from disclosing their own pay – a major cultural shift in many workplaces.

Strengthened enforcement and legal protections

The directive also introduces enhanced legal remedies for employees. Workers may be represented by external organisations in legal proceedings, and the burden of proof in pay discrimination cases will shift to the employer.

If gender-based pay discrimination is established, the directive mandates full compensation, covering both material and non-material damages. Member States will also be required to implement dissuasive penalties to ensure compliance.

How can employers prepare?

Compliance is not only a legal requirement but a strategic opportunity. Organisations also in Hungary should begin by evaluating their current practices: What would a role-by-role, gender-based pay analysis reveal? Do they have quantifiable data on all types of compensation, including bonuses and benefits?

To ensure compliance, employers may need to:

• review and revise job classification systems,
• formalise salary determination procedures,
• redesign recruitment and other HR processes.

They should also prepare to handle internal and external reporting duties, update employee communications, and review contracts and internal policies. Legal alignment with forthcoming national legislation will be critical.

The Pay Transparency Directive as an opportunity

While the directive certainly imposes new administrative and operational burdens, it also offers a unique opportunity to build a more equitable, transparent, and competitive workplace culture – one that can be a key advantage in today’s labour market. Early preparation is essential. The earlier employers begin, the smoother the transition will be.

The experienced teams at WTS Klient Hungary and WTS Legal Hungary offer comprehensive support in all payroll, HR, and labour law matters related to the Pay Transparency Directive. If you need expert assistance, please don’t hesitate to contact us.

This article provides general information and does not constitute advice.

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The Reliable Employer title has been awarded by the DUIHK since 2017 to member companies that are exemplary and reliable in looking after their employees’ working and living conditions, and that meet the criteria developed by a professional jury.

The aim of the initiative is to encourage employers to create employee-friendly workplaces and, at the same time, to strengthen the labour market position of recognised companies in terms of employee retention and recruitment – supporting their employer branding efforts. Applicants are required to provide a detailed report on their HR management practices and the underlying principles. This year’s call for applications included new focus areas such as wage transparency, internal diversity and the integration of diverse employees, the “Whistleblower Protection Act”, and ESG.

The winners were announced at the DUIHK Member’s Meeting on 22 May. Among them, WTS Klient Hungary is now entitled to hold the Reliable Employer 2025–2027 title for three years, after which companies must requalify to retain the award. The recognition was accepted on behalf of WTS Klient Hungary by Gabriella Drávai, HR Director, from András Sávos, President of the DUIHK, and Dr. Ágnes Vörös, Managing Director of BASF Hungária Kft. and Chair of the Jury.

“Caring for our employees and creating a secure and lovable workplace has always been important at WTS Klient Hungary,” said Gabriella Drávai, accepting the award. “We are especially proud of this recognition because, after last year’s acquisitions, it was a much greater challenge to gain the trust and satisfaction of nearly 370 expert colleagues. It is important for us to support our team not only with modern tools and a knowledge base, but also with a wide range of well-being services – so they can work in a great atmosphere, with dedication and commitment. After all, it’s our colleagues whom not only our clients, but we ourselves can rely on,” she added.

WTS Klient Hungary has now received the Reliable Employer title for the third time, having previously been honoured in 2018–2019 and 2020–2021.

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Legal framework of simplified employment in Hungary

Simplified employment is one of the most popular atypical form of employment in Hungary primarily as a result of its streamlined administrative requirements and more favourable public levies.

Simplified employment in Hungary is basically regulated by two pieces of legislation: Act I of 2012 (Hungarian Labour Code) typically contains the most important labour law restrictions and specifies which basic labour law rules may be deviated from in the case of simplified employment and casual employment. Act LXXV of 2010 on Simplified Employment regulates administrative details.

Two forms of simplified employment are distinguished: seasonal work (agricultural or tourist seasonal work) and casual employment, including film extras.

Unchanged provisions: on casual employment

A casual employment arrangement may be entered into between the same parties for a maximum of five consecutive calendar days up to a total of 15 calendar days within a calendar month and not more than 90 calendar days within a calendar year.

A film extra continues to be defined as a natural person whose occupation is classified under FEOR code 3711, provided their role is auxiliary and exchangeable within the film production. The daily net income from this activity can not exceed 12% of the minimum wage valid on the first day of the month, rounded to HUF 100, i.e. HUF 34,900 as from 1 January 2025.

In the case of casual employment under a simplified employment relationship, the number of employees employed on a calendar day may not exceed:

• 1 person, where the employer has no full-time employees under the Hungarian Labour Code,
• 2 persons, where the employer employs between 1 and 5 employees,
• 4 persons, where the employer employs between 6 and 20 employees,
• 20% of the total workforce, where the employer employs more than 20 employees.

Unchanged reporting obligations and wage conditions

The simplified employment relationship is established by verbal agreement between the parties, upon notification by the employer. However, it is recommended that concluding a written contract by using a template available on the NAV website.

Based on the employment relationship established for simplified employment, the basic salary or performance-based wage shall be at least 85% of the statutory minimum wage, or 87% in the case of a guaranteed minimum wage, in accordance with the specified conditions. For film extras, the daily net wage can not exceed HUF 34,900 from 1 January 2025.

The simplified legal relationship has to be reported electronically, by telephone or via a mobile application prior to commencement of work. Notifications cannot be amended or withdrawn retrospectively. Amendments or withdrawals are permitted within two hours of submission, or until 9 a.m. on the day of notification if employment commences the following day or lasts more than one day.

Changes effective since February 1: public levies

From 1 February 2025, public levies payable by employers have changed. The new amount of the public levy calculation base had to be applied for the first time after 1 February 2025, i.e. for legal relationships established on or after 2 February 2025.

The new public tax payable for each calendar day of employment per employee is as follows:

• for seasonal work in agriculture and tourism, 0.75% of the minimum wage valid on the first day of the month, i.e. HUF 2,200
• for casual employment, 1.5% of the minimum wage valid on the first day of the month, i.e. HUF 4,400
• for casual employment as a film extra, 3% of the minimum wage valid on the first day of the month, i.e. HUF 8,700.

Forthcoming changes: new rules on time limits

Unlike casual employment, the time limit for seasonal and casual employment combined is a maximum of 120 days within a calendar year. This time limit has not changed from the previous one and will not change. However, from 1 July 2025, a significant change will come into effect regarding the calculation of the 120 days. While currently a worker cannot work under simplified employment scheme for more than 120 days in a calendar year for the same employer, from 1 July, this restriction will apply to all employers. This means that if someone works for several companies under simplified employment in Hungary, the total number of days spent in simplified employment at all his/her employers cannot exceed 120 days per year.

This restriction was supplemented by a legislative amendment promulgated on 24 April 2025. The amendment supports people working in agriculture by allowing them to extend the 120-day limit by an additional 90 days, subject to higher public levies. This amendment will take effect from 1 January 2026, and does not apply to 2025.

To monitor the time limit, the Hungarian tax authority will introduce an electronic query system enabling employers to verify an individual’s remaining simplified employment quota prior to engagement.

The new time limit rule represents a significant change, as until now the number of days of simplified employment was limited only on the employer’s side. The system, which will come into force on 1 July, will further restrict the possibility of simplified employment in Hungary: employers will have to take the time to check the employee’s quota, as the tax authority may reject the registration if it exceeds 120 days.

With decades of experience supporting clients across diverse sectors, the payroll experts at WTS Klient Hungary offer tailored advice to help employers comply with legal requirements and to optimise employment structures. Feel free to contact us!

This article provides general information and does not constitute advice.

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Funeral leave is not really leave

What has become colloquially known as funeral leave is not really leave in the legal sense, but a kind of “absence”, or more precisely “exemption from work”. This is because the current provisions of the Hungarian Labour Code do not recognise the concept of special leave. Hence, it is not by accident that the legislators excluded absence requested because of the death of a relative from the scope of leave, as the rules on leave do not apply in this case.

What are the rules on leave that are not applicable in this case? 

• Employees must give notice of their request for leave at least 15 days before the start of the leave. Since death is an unexpected event, 15 working days is not meaningful in this case. Employees can also request exemption from their obligation to work on the day of the death.

• When the employment relationship ends, if the employer has not granted the requisite proportional leave, this must be compensated for, except for paternity and parental leave. In the case of funeral leave, unused days cannot be redeemed because this would not be in line with the original purpose – to provide time. 

Which legislation provides for the exemption from work? 

Section 55 (1) of the Hungarian Labour Code provides for the various cases in which employers are obliged to exempt employees from their obligation to work. These include, but are not limited to, illness, compulsory medical examinations, donating blood or taking part in legal proceedings. Point (f) refers to the exemption in the event of the death of a family member:

Section 55 (1) An employee shall be exempted from their obligation to be available for and to work
f) for two working days upon the death of a relative.

Who counts as a relative?

The closing provisions of the Hungarian Labour Code define what constitutes a relative: 

• spouse or partner,
• immediate relative (e.g. grandchild, child, parent, grandparent),
• adopted, step and foster children,
• adoptive, step and foster parents,
• sibling,
• spouse of an immediate relative (e.g. son-in-law, daughter-in-law),
• relative and sibling of spouse’s immediate relative (e.g. mother-in-law, father-in-law, sister-in-law, brother-in-law)
• and spouse of sibling (e.g. sister-in-law, brother-in-law).

This does not include aunts, uncles, cousins or godparents, which also means that in the event of their death, employees are not entitled to funeral leave.

How to request funeral leave? 

The way to apply for funeral leave is to submit a request to the employer, stating the date of the absence, the reason, and the relationship to the deceased. The two days can be claimed in two instalments for days that are far apart in time (e.g. one day for a funeral and one day for a probate hearing).

The employer usually has a form for this purpose, which can be obtained from the HR department.

What documents need to be submitted or presented? 

To get funeral leave, employers may ask for the death certificate or post-mortem report, subject to GDPR rules.

Until when can you take the two days off? 

There is no deadline set in the Hungarian Labour Code, but in accordance with the principle of the proper exercise of rights, the two days must be granted in the period following the death, at the time requested by the employee. It is important to note that there is no 60-day limit.

One small loophole is that in the case of a change of job, the number of days issued or not in this way is not shown on the exit papers. Since this is not very common, there is no best practice, and the Labour Code does not give clear guidance on how to proceed in such a case.

What remuneration is paid for the period of absence? 

Employees are entitled to an absence allowance for the period of the funeral leave, at the same rate as if they were on holiday.

Our article shows that absences for special reasons, such as funeral leave, can be treated differently from normal leave. Our payroll experts are happy to help our clients navigate their way among the many different types of leave and absence. Feel free to contact us.

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Current legislation

Under the current legislation in force, namely Section 49 (1) of Act XCIII of 1993 on Occupational Health and Safety, employers are obliged to reach decisions on all their employees’ fitness for work based on a medical examination. Such a fitness for work test must be completed before starting work and at regular intervals thereafter.

What is the change?

As detailed in Act CIX of 2023 that was promulgated on 23 December 2023, the change means that from September 2024, not all employees will require an occupational physician’s opinion, i.e. a fitness for work test will not be mandatory for everyone. The government was empowered to define in a separate decree the jobs and occupations for which this obligation will remain. The law also permits employers to decide at their own discretion whether to continue requiring this medical examination.

So contrary to the initial interpretations, the fact that “the compulsory medical examination regarding the fitness for work test is to be generally abolished” does not mean that the fitness for work test will be abolished in general, i.e. for all jobs and all employees, it only means that the range of occupations to which it applies is being narrowed.

The aim of the legislation is to reduce the administrative burden by removing the need for a fitness for work test in jobs where there is neither any physical nor psychological strain on the worker.

What do employers need to do now?

At the time of writing, the list of jobs where the mandatory fitness to work test will still apply has not yet been published. So if they want to keep it only for the prescribed jobs, employers are not likely to have a lot of time to prepare. UPDATE! On 21 August 2024, the draft regulation on the occupations for which aptitude tests remain compulsory was published. The draft does not contain specific occupations, but risk factors (e.g. accident hazards, noise exposure, night work, etc.) that justify a medical examination. The draft was submitted for public consultation until 29 August, after which the final version is expected to be adopted. 

At the same time, when deciding whether or not to abolish the tests for non-mandatory jobs, it is worth bearing in mind that other elements of the occupational health & safety law have not been amended, so the employer is still responsible for ensuring that employees are employed in a way that does not adversely affect their health, physical and mental well-being, or that of others, and employees are not engaged in work for which they are not medically fit.

Given that employers do not have an accurate picture of an employee’s state of health, and typically do not have the knowledge to assess fitness for work, it may be worthwhile continuing with the testing regime.

Not only does this help employers by involving a professional in making the right decisions, but regular medical examinations can also help employees identify potential health risks early.

What do we recommend if abolishing the fitness for work test?

Even if an employer in Hungary decides that such a medical examination is not required, it should still consider using the resources freed up in this way to promote the good health of employees. This will both reduce absences for sickness and increase employee satisfaction and loyalty. 

Our experience shows that there is a growing demand from employees for employers to contribute to their healthy living, to support healthy lifestyles and possibly to support health expenditure. This support can take on many forms, tailored to the needs and means of the given company. The most common solutions include contributions to health funds, health insurance, training to promote healthy lifestyles and support for sports activities, but there are many other options available today.

Although many people reading the news that appeared when the amendment was adopted were happy to see the abolition of the compulsory fitness for work test, which often just seemed like extra unnecessary administration, we advise our clients to make their decision after having read the detailed rules and taking the above into consideration. Our HR services division will be happy to assess your company’s situation and give you tailored advice.

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Who can give such benefits and to what extent?

According to the Act on Personal Income Tax, an employer or paying agent may provide tax-free tickets or season tickets for sporting events covered by the Act on Sports to the same individual up to the amount of the minimum wage per fiscal year. This is not new, but before 2019 there was no limit on the value of such tickets and season tickets that could be given to employees. The minimum wage as the upper limit was introduced in 2019. However, the tax exemption is subject to strict conditions.

What tickets to sporting events abroad can be given tax-free?

The fact that a particular match takes place abroad is not a problem in itself since the tax exemption can be applied to tickets for sporting events abroad as well. However, as stated in the NAV information published on 5 April, only the following benefits qualify for tax exemption under the HungarianAct on Personal Income Tax:

• Tickets to sporting events abroad concerning matches involving a Hungarian club team or the national team at a foreign venue, as the relevant Hungarian association or sports organisation is involved in organising them;

• Tickets for events which only have foreign participants but are organised in Hungary, since the relevant Hungarian association or sports organisation is involved in organising them;

• Tickets or season tickets for a series of events or a match of a series of events in a competition which is included in the calendar of the Hungarian association, involves a Hungarian individual or team, but the Hungarian participant may not reach the level (e.g. the final, semi-finals) for which the tickets were purchased in advance.

According to the NAV, an employer can legally provide tickets for the matches of the European Football Championship to be held in Germany in 2024 and the events of the Paris Olympics up to the 2024 minimum wage, i.e. up to HUF 266,800, tax-free. Any Olympics event can be attended since it is a single competition covering many sports. In other words, it is not possible to stipulate that only events in which a Hungarian competitor or team will be competing are eligible events for the public. Consequently, tax-free tickets can also be granted for Olympic sports events without Hungarian competitors and for the opening or closing ceremonies.

Further conditions for tax exemption

As shown by this information from the NAV, it is important that the employer or paying agent buys the tickets and has an invoice issued in their name. If the ticket is purchased by an individual, an invoice must be requested in the name of the employer or paying agent.

However, if – for any reason – the purchase of digital tickets can only be invoiced in the name of the individual, the reimbursement of the digital ticket is considered a reimbursement of expenses, not an employer or payer benefit, and therefore does not qualify for the tax exemption. If the employer reimburses the price of a ticket purchased in this way, the amount paid will be taxable as employment income for the individual and as other income if paid for by a paying agent. 

It is also good to know that free tickets cannot be converted into cash, and that benefits given by the employer in excess of the minimum wage are taxable as wages. Paying travel or accommodation expenses incurred in connection with tickets for sporting events abroad is also considered employment income given the legal relationship between the parties, which is subject to 15% personal income tax, social contribution tax and other contributions. Please also note that when attending a match during a business trip, mixing business with pleasure, it is risky to treat travel or accommodation expenses as tax-free benefits.

If you have any questions regarding tickets for sporting events abroad or any other benefits given by the employer, our tax experts are here to help.

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Minimum wage 

Although it will not reduce administration in payroll, the changes to the minimum wage in Hungary should be highlighted among the changes affecting payroll in 2024. As we previously revealed, breaking with tradition the decision to raise the minimum wage and the guaranteed wage minimum was taken in November 2023, but there were two stages to implementing the amendment.

The new minimum wage and the guaranteed wage minimum were taken into account for the first time when determining wages due for the month of December 2023. The minimum wage increased to HUF 266,800 gross, while the guaranteed wage minimum is now HUF 326,000 gross.

In connection with the increase in the minimum wage and the guaranteed wage minimum, the tax payable on simplified employment changed, since this rate is based on the minimum wage, and the minimum contribution threshold for employees also changed.  This is because the minimum contribution threshold for employees is 30% of the minimum wage, so from 1 December 2023 the social security contribution and social contribution tax will be payable on HUF 80,040.

When assessing insurance in the case of contract work, the increased minimum wage in force from 1 December 2023 is also used to determine whether or not the individual becomes insured. If the income underlying the contributions for the given month reaches 30% of the minimum wage or, one-thirtieth of the minimum wage when broken down by calendar days, i.e. HUF 2,668, the contractor is obliged to register, declare, deduct and pay.

The second step affected social security benefits, rehabilitation contributions, social contribution tax allowance, personal tax allowance or remote-working cost reimbursements linked to the minimum wage, and for these the amendment was not applicable until January 2024.

Other fringe and non-wage benefits 

One area where administration in payroll really has been reduced in Hungary from this year is payer returns. As we touched upon in the summary of 2024 tax amendments, the obligation to declare and pay certain other fringe and non-wage benefits no longer has to be met on a monthly basis like in previous years, but on a quarterly basis. One exception here is among others the portion exceeding the annual allowance of the fringe benefits granted to an employee who leaves during the year (SZÉP card recreational allowance). In practice, this means that if part or all of the fringe benefit given to the employee in the month of departure is no longer considered a non-wage benefit, the tax on the benefit must be declared and paid in the month of departure instead of as part the quarterly obligation.

Claiming health insurance benefits 

The other area where administration in payroll is changing significantly – albeit not yet simplified – from 2024 is the administration of health insurance cash benefits. This is because from 1 January 2024, the procedure for claiming health insurance benefits in Hungary (sick pay, accident sick pay, infant care allowance, childcare allowance, etc.) for employers who are not social security paying agents has changed. Instead of the general programme for completing forms (ÁNYK), claims must now be submitted through the Business Gateway.

This means that forms sent from the ÁNYK, such as employer certificates, claim forms and forms on permanent incapacity to work will no longer be accepted by the health insurance fund. The claim form EB_IGBEJ_01 can be found in the Personalised Administration Interface (SZÜF), available from the Business Gateway (or Government Portal or Office Gateway), under the Health/Health Insurance Cash Benefits menu. If the claimant is applying on the grounds of a permanent incapacity to work, the EB_FOLYKK_01 form should be used.

Of course, it is still possible to submit the form by proxy, but for this the proxy must be registered in the E-Administration Register (RNY).

In this article, we have highlighted only some of the changes to payroll accounting affecting employers and employees in 2024. Our payroll experts will be happy to provide you with more information on other benefits and legislation, and how they may be applied at your company. Please do not hesitate to contact us.

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Remote work in Poland: 24 days a year

Remote work in Poland will be performed fully or partially in the place indicated by the employee and approved by the employer. For all employees, there is a limit on the number of days in a year when work can be performed remotely. This limit has been set at 24 days. For some employees (e.g. parents raising children under four years of age), remote work is unlimited as long as it is compatible with their type of work.

To duly implement remote work in Poland, it is crucial to assess the opportunities and challenges for a given employer, prepare internal regulations, review employment contracts and take care of training.

Tax impacts of the new labour rules

In terms of tax impact, employers will be required to:

• provide the materials and tools necessary for remote work; or
• pay cash compensation or a fixed sum for the employee to use their own personal tools.

The provision of tools and materials or the payment of compensation or a fixed sum to the employee by the employer as per the above may not lead to the generation of any additional taxable income for the employee.

However, questions have already been raised about how to calculate the compensation and the fixed sum so that it is tax free. The amount should correspond to the employee’s estimated costs of working remotely. According to the Polish law, major items to be taken into account in such an estimation are standard wear and tear of materials and tools, including technical equipment, their documented market prices, the quantity of materials used for the employer’s purposes, the market prices of the materials, as well as standard consumption of electricity and costs of telecommunication services.

Employers’ organisations have already asked for official guidelines regarding compensation for employees and other aspects of the new law.

Increased mileage rates in Poland

Apart from the changes to the status of remote work in Poland, due to the Infrastructure Minister’s regulation on 22 December 2022 to rules on business trips have been amended in Poland, too. Consequently, after 15 years without changes, the per-kilometre rates were increased on 17 January 2023 to reach the following caps:

• PLN 0.89 (previously PLN 0.5214) for passenger cars with an engine cubic capacity of up to 900 cm3
• PLN 1.15 (previously PLN 0.8358) for passenger cars with an engine cubic capacity of more than 900 cm3
• PLN 0.69 (previously PLN 0.2302) for motorcycles
• PLN 0.42 (previously PLN 0.1382) for mopeds

If an employee in Poland uses a private car during a business trip (in which case, the vehicle mileage record is obligatory), such an allowance is exempt from personal income tax and social security only up to certain limit according to the Polish PIT Act. The limit for a passenger car is as follows:

• For cars with an engine cubic capacity of up to 900 cm3 = PLN 0.89 (previously PLN 0.5214) × number of kilometres
• For cars with an engine cubic capacity above 900 cm3 = PLN 1.15 (previously PLN 0.8358) × number of kilometres

Thus, the tax-free allowances have just increased due to the change in the law.

A respective change has also increased the allowance limits for local travel, calculated as a fixed monthly sum or a sum based on mileage.

If you would like to know more about the new rules on business trips or remote work in Poland, or need any tax advice regarding the country please visit the homepage of WTS&SAJA Sp. z o.o., the exclusive representative of WTS Global for Poland and contact their experts.

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What exactly do employers give? 

It is important to clarify exactly what kind of scheme is involved, what the employee has acquired (e.g. an option or ownership right), as well as any conditions and restrictions on using the acquired rights. The individual schemes in Hungary may vary, and companies design the conditions of each one to ensure that employees are interested in participating.

A share transfer is when the employer transfers the ownership of the securities.  So from this point on, employees have the right to utilise the securities and sell them at their discretion.

It becomes more complex when the employer grants an option. In this case, employees as the owner have no authority over the securities when the option is acquired, and they only acquire the securities when the option is exercised. A significant time can elapse between acquiring and exercising the right, as employers typically make exercising the option contingent upon a certain performance or a given length of service, for motivational purposes.

Can taxable income arise at the time of acquisition?

With a share transfer, the situation is relatively simple: when ownership of the securities is transferred, the income becomes taxable.

With an option right, however, it must be examined upon acquiring the option whether the right itself has a market value, whether it is marketable, and whether the employee has acquired income upon the transfer of the right. The inception of the taxable income is then re-assessed when the option is exercised, and the difference between the market price and the value actually paid is determined. When analysing the points of taxation, we need to find out, for example, whether the transferred share or right has a market value, whether the right acquired is marketable.

The legal grounds to the income are determined by taking into account the legal relationship that otherwise exists between the parties, and the circumstances of the acquisition. When determining these grounds, we also seek an answer to whether the employer or the employee is liable for any tax advance payment.

If the employer grants call options and grants these rights exclusively to its employees in Hungary, income may arise based on the difference between the market price and the value actually paid when the option is exercised, which is considered employment income.

What should an employee posted from abroad look out for?

When assessing income from employment, expat employees working in different countries face a difficult task determining the state in which the tax liability arises because of the various double taxation conventions.

This reads even more true for securities acquired with an option, since there is a so-called reference period to be considered, which is generally the period between acquiring and exercising the option. During this period, the tax residence status and the tax liability of the wages must be examined, and where appropriate, any income realised on acquiring securities at below market price should be divided between the countries concerned.

Another point of taxation: sale of securities

The gain on the sale of acquired securities constitutes a capital gain at the time of sale. This can be both an exchange gain and income from a stock exchange transaction. Different taxes must be paid depending on the type of capital gain.

In both cases, the income is the difference between the sale price and the value of the acquisition, less the specified ancillary costs. Importantly, when calculating the acquisition value, the difference between the purchase price and the market value must be taken into account alongside the purchase price actually paid. This ensures that the same capital gain is not taxed twice.

In addition to the personal income tax on capital gains, income from exchange gains may also give rise to a social contribution tax liability in Hungary, if the employee does not verifiably pay contributions in another country.

What to look out for with foreign securities?

Capital gains are generally taxable in the country of residence. With dividend income, the source country normally retains the taxation right to a certain extent, but exchange gains and gains from stock exchange transactions are, as a rule, taxable in the country of residence.

That said, many countries levy special taxes on capital gains.  Such taxes can include a capital appreciation tax.  In practice, this means that a tax liability may be imposed on certain types of capital appreciation even if the owner of the securities has not yet realised any income from them (i.e. has not yet sold the securities).

In many countries, capital appreciation tax is linked to certain events, such as a change of residence. In this case, an exit tax is payable in the source country, provided certain conditions are met. Since Hungarian legislation does not currently apply this form of taxation, there may be differences compared to the laws of the source country as to which events can trigger a tax liability and on which dates. However, double taxation conventions typically also allow capital gains taxed in this way in the source country to be exempt from tax in the other country.

The most important thing to remember is that income does not only arise when you realise income in a tangible way.

Both different local laws and different international conventions have a significant impact on the treatment of income from different securities. This requires a great deal of care on the part of individuals in terms of tax planning and the administration that goes with tax, including the accurate completion of tax returns. WTS Klient Hungary has considerable expertise and experience regarding the  taxation of foreigners working in Hungary. If your company also employs posted workers, don’t hesitate to get in touch with us.

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