The higher wages are designed to attract workers who have left the country, back to Hungary, also to bring foreign workers from neighboring countries.
But not only the wages were changed, Hungary decreased more payroll taxes and offers tax exempt benefits in kinds widened. More, the employees with reduced ability to work receive extra vacation.
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Increase of the minimum wage
Hungary constantly and annually increases the minimum wages. The level of minimum wages met the general level of the surrounding countries.
Hungary has increased its minimum wage by 15% in 2017 and another 8% in 2018. Currently, the minimum wage is: 138,000 HUF (450 EUR).
The minimum wage for skilled workers have also increased by 25% in 2017 and another 12% in 2018. Currently, the minimum wage for skilled workers is: 180,500 HUF (590 EUR).
Payroll Tax decreased
Additionally, to the above changes, the payroll tax has decreased in 2017 by 5% and another 2,5% in 2018. Currently, the social contributions payable by the employer is 19,5% (2017: 22%, 2016: 27%). The social charges on certain non-wage benefits has been decreased to 19,5%.
Higher salaries are given to employees working on rest days. In general, we can say that working on Sundays represent a 50% extra, while working in shifts 30%, night shifts 15%, and working on public holidays is at least 100% extra.
Tax exempt benefit in kinds widend
The most popular tax (PIT) exempt benefits in kind are cultural vouchers, admission to sport events, allowance of housing loans or nursery/kindergarten allowance.
Beside these benefits, Hungary implemented tax exempt allowances of traveling or housing for commuting employees. The circle of eligible person has been widend due to the recent changes. The aim of the exemption is to encourage employees to move within Hungary just for work purposes more easily, and so decrease the level of structural unemployment. If certain conditions are met the employer can support the rental fee of flat or travel tickets free from income tax.
In addition, tax exempt allowance can be provided to redemption instalments of the so called students loan (eligible for students of university or college), making the start of employment for new joiners more effective.
Employees with reduced ability to work receive extra vacation
Employees construed as a person with reduced ability to work (having suffered a degree of health impairment of at least forty per cent as diagnosed by the body of rehabilitation experts; has diminished capacity to work of 50% to 100%; or entitled to rehabilitation allowance) shall be entitled to five working days of extra vacation time a year. These provisions lower the conditions for this privilege compared to the previous rules.