EY Payroll Newsletter

Important changes in payroll, social security, and labor law.  

Supplement to Government Decree No. 450/2024 (XII.23.) on the Employment of Guest Workers in Hungary

According to Government Decree No. 450/2024 (XII.23.), a national from a third country that has concluded a readmission agreement with Hungary or the European Union may be employed in Hungary with a residence permit for work purposes or a residence permit for guest workers.

Communication No. 2/2025. (I. 9.) of the Ministry of Foreign Affairs and Trade states that in addition to Georgia and Armenia, citizens of the Republic of the Philippines also belong to this group. 

Change in Government Decree No. 217/1997 (XII.1.) on the Implementation of Act LXXXIII of 1997 on Compulsory Health Insurance Benefits

The Government Decree on the Implementation of the Act on Compulsory Health Insurance Benefits has been supplemented by Section 49/C. The legislation specifies the category into which the following health insurance cash benefits fall, in accordance with EU Regulations on the coordination and implementation of social security systems:

• Sick pay - cash sickness benefit
• Infant care benefit - maternity and equivalent paternity benefits in cash
• Accident-related sick pay - cash benefits related to accidents at work and occupational health issues
• Child care benefit and foster parent childcare benefit - family benefits in cash

Paragraph 2 of the added provision outlines the competent authorities that are responsible for executing tasks related to international data exchange in accordance with EU Regulations on the coordination and implementation of social security systems.

It is important to emphasize that if it is essential to clarify which EEA country is the primary burden bearer in determining and paying child care benefits and foster parent childcare benefits, the EEA government office serves as the competent authority.

If data exchange under EU Regulations on the coordination and implementation of social security systems becomes necessary during the paying agency's benefit procedures, the paying agency will contact the government office, which will ensure that the data is obtained.

If, during the process of determining child care benefits or foster parent childcare benefits, or while these benefits are being disbursed, it is found that the insured person (or his or her family member) resides in another EEA Member State, is insured there, or has applied for or received family benefits there, the health insurance institution or the paying agency will contact the EEA government office. The EEA government office will clarify with the foreign body which Member State is the primary burden bearer and will inform the requesting body accordingly. If an authority of another EEA Member State requests the verification of data that the paying agency is competent to provide but the data is not available to the government office in the framework of data exchange under EU Regulations on the coordination and implementation of social security systems, the government office will contact the paying agency to request the data. The paying agency is obliged to provide the requested data to the government office within eight days.

It applies from 24 January 2025. 

Amendment of Government Decree No. 223/1998 (XII.30.) on the Implementation of Act LXXXIV of 1998 on Family Support

In light of the amended Decree, if an individual applies for multiple family support benefits at the same time in person or by post, the documents –  or the copies required for the assessment of several applications in accordance with the provisions of this Decree – should only be attached to one of the applications.

If the applicant has already been paid some kind of family support benefit, then when submitting a new application in person or by post, the document otherwise required for the assessment of the application that was presented or attached at the time of submitting the previous application does not have to be presented or attached, provided that the data certified by the applicant has not changed in the meantime.

This applies from 24 January 2025. 

Decision No. 1/2025 (II.27.) of the Constitutional Court

The Constitutional Court has established that the last phrase of the second sentence in Section 146 (2) of Act I of 2012 on the Labor Code ("or otherwise unfit to perform one's duties for health reasons") is unconstitutional based on Article XV (2) of the Fundamental Law of Hungary and has annulled it.

The Constitutional Court declares that in the event of an employee's inability to perform the work in question due to health reasons, the employer's general employment obligation remains unchanged.

The decision also applies to ongoing cases. In practice, this means that if an employee is fit for work, but a doctor has declared him or her unfit for work during the occupational health examination, the individual cannot be left without remuneration. The person either has to be offered another job, or the employer must initiate the termination of the employment relationship (taking into account the employee's notice period and severance pay). Alternatively, the employee is entitled to downtime until the situation is resolved.

The Constitutional Court decision is effective from 28 February 2025. 

Health insurance benefits, and updates to documents used in the performance of paying agent tasks

In January, the  child care benefit for students (hallgatói gyermekgondozási díj) form was updated, and in February, a new application was uploaded for child nursing sick pay (gyermekápolási díj). Three resolution forms have also changed: the resolution on the continued disbursement of benefits (határozat ellátás továbbfolyósításáról); the suspension of childcare allowance – reimbursement (gyermekgondozási díj felfüggesztése – megtérítés), and double payment (kettős folyósítás). Two information notices were published in February concerning paying agents. The first one summarized the legislative changes that took effect at the beginning of the year concerning health insurance cash benefits and accident-related sick pay. The second presented the procedure for the reimbursement of child care benefit and foster parent childcare benefit in EEA-related cases.

The Hungarian State Treasury has also published two information notices  on paying agents: on the procedure applied to the reimbursement of child care benefits and foster parent childcare benefits in EEA-related cases; and on the most important new rules and procedures concerning health insurance cash benefits and accident-related sick pay, as well as the their application in practice.

Updated information booklets and forms on the website of the Hungarian Tax Authority (NAV)

The NAV forms are always being updated, and most of the 2025 information booklets have already been uploaded to the website of the tax authority. 

Preparation of the 2024 tax returns

On 15 March 2025, the Hungarian Tax Authority made the draft tax returns available to taxpayers who have electronic storage.

By 30 April, the tax authority will notify taxpayers with electronic storage who have not corrected or supplemented their draft tax returns about the amount of tax payable or refundable. The tax authority also will notify private individuals who do not have electronic storage space by post if they have refundable or payable tax amounts and have not requested a draft paper-based tax return or have not fulfilled their tax return obligation in any other way by March 17.

The tax returns can be amended, corrected or approved until 20 May. The deadline for submitting the provision on 1+1% of the tax liability is also this date.

More information about tax return filing is available on the NAV ESZJA website. Taxpayers can also view and submit their tax returns here. 

Bills on infant care benefit (csed), child care benefit (gyed) and foster parent childcare benefit (öfd)

On 19 March, the Ministry of Culture and Innovation submitted draft legislation for public consultation that would allow individuals to pursue gainful employment while receiving infant care benefit (csed). The draft legislation was submitted on 2 April 2025. (T/11417)

Under the current regulations, individuals receiving infant care benefit are not allowed to participate in any form of gainful employment, with the exception of foster parenting. According to the submitted bill, mothers would be able to work after the third month following the birth of their child. The draft proposes that the infant care benefit would be 70 percent of the calendar day base instead of the current 100 percent while working.

The legislator’s intention is that the law would also apply to ongoing benefits and would enter into force from 1 July 2025.

On 26 March, bill T/11334 was also submitted on allowances related to infant care benefit, child care benefit and foster parent childcare benefit. According to the draft, private individuals receiving infant care benefit, child care benefit or foster parent childcare benefit or several of these benefits at the same time can reduce their consolidated tax base determined pursuant to Section 29 of Act CXVII of 1995 on Personal Income Tax by the allowance of infant care benefit, child care benefit and foster parent childcare benefit. This means that all three of these benefits will be exempt from personal income tax. If the claimant utilizes several benefits at the same time, the allowance will be available for each benefit separately according to the draft, which would enter into force on 1 July 2025. 

Bill on the personal income tax exemption for mothers raising children

The draft legislation on the personal income tax exemption for mothers raising three children (T/11358) was also submitted on 28 March. Similarly to NÉTAK (the allowance for mothers with four or more children), this allowance will apply to income included in the consolidated tax base, typically qualifying as wages, or income from self-employment, for example. There will be no upper limit, and it will not be affected by the age of the mother. If the bill is approved, it will enter into force on 1 October 2025.

On 31 March, a bill on the allowance for mothers raising two children was also submitted (T/11389). The draft states that the mother’s age will determine her eligibility for personal income tax exemption if she has two children. Starting in 2026, mothers with two children who are under 40 years old will be exempt from taxes. In 2027, this exemption will extend to mothers aged 40 to 50, followed by those aged 50 to 60 in 2028, and finally, mothers over 60 will be eligible for the exemption in 2029. According to the draft, the legislation will enter into force on 1 January 2026. 

The new data reconciliation procedure focuses on simplified employment in April

On 3 April, the tax authority published an announcement stating that it had started sending out the latest calls for data reconciliation at the beginning of April. In our article, we detailed the legal background of the data reconciliation procedure and what employers can expect if employee registration rules are violated.

In April, the tax authority will focus on individuals engaged in simplified employment. It will contact companies that have reported simplified employment but did not include these employees in their tax returns and call on them to correct the errors. After the tax authority’s contact, taxpayers have 15 days to react or make the necessary corrections. If they fail to do so, the tax authority will impose a fine of HUF 300,000, and an audit may also be initiated against the taxpayer. 

Social security booklets will be digitized, and paper-based versions will be discontinued

The Ministry of Interior issued a statement on 5 April announcing that social security booklets will be digitized, and paper versions will be phased out. The electronic system will replace the traditional social security booklet ("TB kiskönyv") employers have used to record employees' social security status and health insurance benefits.

According to the statement, since the information contained in the Social Security Booklet is already available digitally in various digital registers, the paper-based form can be discontinued. The plan seeks to reduce the administrative burden on employers, increase the speed and accuracy of administration, and enhance data precision. In the past, there were cases in which legal relationships and benefits were not fully documented in the booklet.