BREAKING: Tax benefits change, 3rd-country guest workers will earn less in 2025 in Hungary!

Ukrainian and Serbian guest workers in Hungary should not be worried about the changes; however, Vietnamese, Indian, Kyrgyz, Kazakh, Montenegrin, Venezuelan, etc. employees will earn less if they raise children, are below 25, or get a tax benefit due to marriage.

New rules will decrease the salaries of many guest workers in Hungary

Regarding tax benefits, the Hungarian state is rather generous to families raising three or more children. On the other hand, allowances based on social status are much lower than in most European countries because the Hungarian government believes such financial help should only be given to those who work and, as a result, contribute to the country’s GDP increase.

Although the Hungarian government seemed committed to attracting guest workers to Hungary with several alleviations, a significant change is coming in 2025 thanks to the modification of tax laws in Hungary.

According to Telex, many guest workers will no longer be eligible for family tax benefits, lose the allowance for young couples in first marriage, and can no longer receive the tax benefits for employees under 25.

There are around 70 thousand unfilled positions in Hungary. Photo: depositphotos.com

The good news is that the modified tax rules do not apply to guest workers coming from neighbouring countries. Therefore, Ukrainians and Serbians should not be worried. However, all other citizens coming from non-EEA countries should be aware that their revenues may fall next year.

Three types of tax benefits will be unavailable

According to Telex, based on the LV. Law of 2024 about the change of several tax laws, from January, Vietnamese, Indian, Indonesian, Kyrgyz, Uzbek, Venezuelan, Montenegrin, Filipino, etc. workers may earn less. The reason is that they and all other 3rd-country nationals not coming from the neighbouring countries will no longer be eligible for family tax allowance, the allowance for young couples in first marriage, and the tax benefits for employees under 25.

Telex wrote that one of the biggest Hungarian HR companies informed its employees about the changes. That means all of them will have to pay 15% personal income tax and 18.5% social security contribution. The calculation is simple: your gross wage minus 33.5% will be your net salary paid in cash or transferred to your bank account.

This means that if a 3rd-country employee not from neighbouring countries like Ukraine or Serbia is employed for a HUF 450,000 (EUR 1,100) gross wage per month, he gets HUF 299,250 (EUR 731) even if he e.g. raises three or more kids.

Employees raising one kid will get HUF 10,000 (EUR 24) less, and that number increases to HUF 40,000 (EUR 98) in the case of two kids and HUF 99,000 (EUR 242) in the case of three kids. Young employees under 25 will receive 15% less (because they will have to pay personal income tax), while young couples in first marriage will get HUF 5,000 (EUR 12) less.

Stricter conditions to hire guest workers

Earlier this year, the Orbán cabinet introduced stricter rules concerning the employment of guest workers. First, employers punished with administrative or OSHA fines in the previous 12 months cannot hire a guest worker. Secondly, they cannot hire a guest worker from a third country if they were punished for illegally employing guest workers before. Finally, employers under compulsory liquidation, and forced strike-off cannot hire a guest worker. Moreover, if a Hungarian employer rejects to hire a Hungarian job seeker due to unsupported claims, they should expect sanctions.

According to Telex, employers believe those modifications did not prevent the growth of the number of Asian guest workers in Hungary. FM Péter Szijjártó talked about 128,000 workers from countries outside of the European Union in Hungary in October. Of course, the majority of them are Ukrainians and Serbians. Meanwhile, the number of unfilled positions stood at 71,000 then.

The increase in the number of guest workers flattened

Károly Radnai, the CEO of Andersen Adótanácsadó Ltd, agreed with the abolishment of the tax benefits for 3rd-country guest workers since the government’s aim is not to settle those employees. According to the latest data from the Hungarian Central Statistical Office (KSH), the number of guest workers in Hungary stagnated in the past few months. Telex or the KSH did not give a reason, but it is a fact that the Hungarian government is struggling with multiple structural problems, and GDP growth is expected to be extremely low this year.

Read also:

• Will employment of guest workers in Hungary face further restrictions soon? – read more HERE
• Food courier crisis in Hungary: Labour shortage and opportunities for foreigners with KATA tax revisions

Featured image: depositphotos.com