Hungarian government introduces new law for companies with foreign workers
Under the Hungarian government’s proposed law, digital companies employing foreign workers could be granted a special status. The aim is to lure IT workers to Hungary; however, experts say the opposite could happen.
New Hungarian bill
According to the new bill proposed by the Cabinet Office of the Prime Minister, led by Antal Rogán, digital companies that employ more than 60 percent of foreigners from outside Europe would be granted special status in some areas of activity.
The ministry’s aim is to make Hungary more attractive in another sector, after the battery industry. In particular, companies that base their businesses on workers from outside Europe would be targeted. The Cabinet Office’s bill proposes a preferential tax regime for companies and their workers.
Under the draft legislation, these companies would be exempt from paying public charges and local business tax. The new system devised by the Rogán ministry would only be open to companies with a majority of workers from third-world countries, 24.hu reports.
The Prime Minister’s Office posted the text of the proposal on the government website in December 2023. It is not yet known when the government will decide. “The digital company form will help to expand employment in the high-tech field by leaps and bounds, as well as to create more attractive domestic conditions for Hungarian professionals working abroad in the high-tech field and to improve the competitive situation by enabling highly qualified foreign professionals to be employed in Hungary.”
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Not everyone likes it
The concept of a digital company would be created by law, if adopted. Private limited companies or public limited companies with a capital of at least HUF 20 million that enter into a contract with the competent authority could become a digital company. The law also specifies the main forms of activity.
As mentioned above, the main aim is to attract programmers and IT specialists to Hungary, as there is a shortage of them.
However, experts believe that it is the companies that employ cheap guest workers that stand to benefit. There are many activities that do not require programmers, but assembly and manufacturing, for which unskilled, cheap labour is suitable.
This is controversial, as the Hungarian government has just taken action to protect Hungarian jobs, following reports that several manufacturing companies are moving into Hungary and are laying off Hungarian workers while employing workers from the Far East.
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