Hungary, a landlocked country that is a gateway to Central Europe, is a driving force in manufacturing and trade, with a GDP of USD 488 billion and an export-oriented economy that ranks 35th globally.

Hungary offers more than just a thriving economy — it provides businesses with a low-tax, high-reward environment in the heart of Europe. With the lowest corporate tax rate in the EU at just 9%, a skilled workforce, and a booming automotive industry, Hungary is one of the most attractive places for companies looking to expand.

Budapest, the capital, is a city where history meets modern business success. Famous for its grand architecture, vibrant financial sector, and growing startup scene, it’s a place where commerce flourishes alongside cultural heritage.

Hungary’s 2,106 km border with seven countries — including Austria, Slovakia, and Romania — gives businesses direct access to both Western and Eastern European markets, making expansion easier than ever.

Trade fuels Hungary’s economy, with 79% of its exports going to EU countries. Germany stands as Hungary’s largest trading partner, strengthening its position in Europe’s industrial supply chain.

The country’s automotive, IT, and manufacturing sectors continue to attract global investment, with companies like Audi, Mercedes-Benz, and BMW choosing Hungary as a production base.

Beyond its industrial strengths, Hungary is rich in natural resources, particularly thermal and mineral water sources, attracting thousands of tourists each year. It is also a key player in global trade. Key exports include:

Key ExportValue (USD)Year
Electrical and electronic equipment40.70B2023
Vehicles other than railway and tramway27.54B2023
Machinery, nuclear reactors, boilers22.87B2023
Pharmaceutical products8.46B2023
Plastics5.42B2023
Mineral fuels, oils, and distillation products4.97B2023

Hungary is home to a highly educated, multilingual workforce, with an unemployment rate of just 4.4% — one of the lowest in Europe. A high human development index and low-income inequality (ranked 22nd globally by the Gini index) make it a stable, business-friendly country where companies can thrive.

English proficiency is widespread, making Hungary one of the easiest non-English-speaking nations in Europe for international companies to operate in.

Whether you’re looking to set up manufacturing, enter the European market, or take advantage of Hungary’s tax benefits, this country offers an unbeatable mix of economic strength, workforce talent, and strategic location. 

If you also want to expand your business into this central European market, looking into a few considerations would help. Partnering with a PEO in Hungary can help you hire a local workforce in one of Europe’s most promising markets. 

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Why Hire a PEO in Hungary?

Budapest, the country’s capital, is a fast-growing financial and business center, home to major banking institutions, multinational offices, and a vibrant tech ecosystem.

The city consistently ranks among Europe’s best locations for business expansion due to its strong trade connections with neighboring countries.

Hungary’s business-friendly policies and pro-investment environment make it a preferred destination for companies in the IT, manufacturing, and automotive sectors, especially with Germany as its largest trading partner.

However, despite its advantages, expanding into Hungary comes with regulatory challenges.  Hiring employees, setting up payroll, and ensuring compliance with Hungarian labor laws require in-depth knowledge of the country’s regulations. This is where the Professional Employer Organization (PEO) comes in. 

Think of a PEO as a local expert who does the hiring, employee management, etc. In Hungary, a PEO offers you the following services and makes it easy for you to run business operations. 

  • Hiring employees, offboarding, and termination are all handled by the PEO. 
  • From making payments to managing taxes and social security contributions, PEO handles all employee-related tasks. 
  • Manage all employee benefits, including health insurance, pension plans, paid leaves, etc. 
  • Handles tax filings, record-keeping, and compliance with local laws.

Business expansion in a new country involves a lot of permits, licenses, and paperwork. You can save yourself the trouble by partnering with a PEO who manages the paperwork, handles compliance issues, and helps you focus on generating revenue quickly while they hire a talented workforce in the region.

For example, when hiring an employee in Hungary, a compliant employment contract must be drafted. This contract serves as a legal agreement between the employer and the employee. It must mention the details of the employee’s role, salary, working hours, benefits, and any probationary period, all in compliance with the local labor laws.  

For a foreign business entering the local market, it is difficult to understand the local labor laws, draft compliant contracts, negotiate terms, and manage employee relations. If you outsource HR tasks to the PEO, they handle all such requirements and keep your business compliant. 

Start hiring with a Hungary PEO

Let us handle the complexities of hiring, compliance, and payroll in Hungary while you focus on growing your team.

  • Hire employees in Hungary with a Hungary EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Hungary

👉 Get Your Customized Hungary PEO Proposal Today!

How a PEO Simplifies Business Expansion in Hungary

If you want to achieve economic growth in the European market, Hungary provides the right opportunities. However, the European laws present unique challenges that PEOs can resolve. 

Here’s how a PEO simplifies business expansion in Hungary.

Quick Market Entry

Hungary is situated in Central Europe, presenting businesses with lucrative opportunities for growth and expansion. As a member of the European Union (EU), the Schengen Zone, and the European Economic Area (EEA), Hungary enjoys strong trade relationships and investment incentives that make it an attractive destination for international businesses.

However, complex labor laws, tax regulations, and trade agreements make it difficult to hire a workforce all while remaining compliant.

On top of this, managing legal requirements and hiring a local workforce can take several months, delaying market entry for both startups and established companies.

This is particularly beneficial for startups, multinational companies, and businesses expanding into the EU as they focus on scaling operations while remaining fully compliant with Hungarian labor laws.

Payroll Management

Businesses must comply with the obligations towards the local labor laws, payroll taxes, and social security contributions in Hungary. Failure to comply with the Hungarian and EU labor laws can result in fines.

Besides these, you must also fulfill requirements such as mandatory employment contracts, statutory benefits, and structured termination policies. The following considerations are of utmost importance. 

  • Mandatory written employment contracts specifying salary, job role, working hours, and probationary periods.
  • Employer social security contributions of approximately 13%, covering pension, health insurance, and unemployment benefits.
  • Personal income tax (PIT) is at a flat rate of 15%, deducted at the source by the employer.
  • Strict termination laws require valid reasons for dismissal and statutory notice periods. 
  • EU and Hungarian tax compliance, with businesses subject to audits and potential penalties for non-compliance.

Simply put, a PEO can simplify payroll management and handle tax calculations.

They also handle salary disbursements, administer employee benefits, and speed up market entry, all while saving your company from costly legal pitfalls. 

Cost Efficiency

Businesses can save HR-related expenses when you enter a co-employment arrangement with a PEO. For example, PEOs provide your business with comprehensive HR support, cutting down on costs required for handling paperwork, hiring translation services, or investing in other HR-related areas.

You can invest this budget for other core activities of your business, such as marketing, expansion, and product development. 

Talent Acquisition

Hungary has a highly skilled and educated workforce, with an adult literacy rate of 99%, along with a high human development index. 

Unlike some neighboring countries, language barriers are minimal, as English proficiency is high, especially among professionals in business, technology, and finance.

However, one of the biggest challenges for foreign businesses is understanding Hungary’s wage structures and sector-specific employment regulations.

Hungary also lacks industry-specific collective agreements. Most collective bargaining in Hungary happens at the company level, meaning agreements are mainly made between individual employers and their employees rather than across entire industries.

Based on the PEO you’re working with, some PEOs can help with talent acquisition, negotiate terms for employment, and draft employment contracts, all while remaining compliant with Hungarian labor laws. 

From sourcing skilled professionals to ensuring competitive salary packages and compliance with social security contributions, a PEO makes hiring a workforce quite an easy job for your business.

Scalability

For businesses looking to scale operations quickly, hiring and managing employees in-house can lead to HR bottlenecks, rising administrative costs, and compliance risks.

A PEO in Hungary provides flexible employment solutions, allowing your business to adjust the workforce based on demand without long-term commitments or regulatory burdens.

With a PEO handling recruitment, payroll, and HR compliance, businesses in Hungary can adapt to changing market conditions, control costs, and expand efficiently. 

How To Choose the Best PEO in Hungary

A PEO handles all your HR-related tasks, meaning you must find a reliable service to partner with. Your PEO must provide comprehensive HR support, have a strong local presence, and should be well-versed in Hungarian labor laws.

There are a few considerations that can help you choose the best PEO in the region for smooth market entry. 

Compliance and Local Expertise

Expanding into Hungary requires more than just understanding market opportunities — it demands a strong grasp of local regulations, labor laws, and administrative processes.

Hungary excels in international trade, achieving the top position globally for Trading Across Borders. However, businesses often face challenges in compliance and regulatory requirements that can slow down operations. For example, Hungary’s employment laws mandate detailed contracts covering wages, benefits, and termination policies. Companies must also ensure compliance with tax regulations, which can be complex for foreign businesses.

Work permits and visas for expatriates require careful handling, as Hungary enforces specific policies governing foreign employment. Missteps in these areas can lead to penalties or legal issues. By applying in-depth local knowledge, a PEO ensures businesses stay compliant with the ever-changing Hungarian labor laws, efficiently manage payroll and tax filings, and handle administrative complexities. This allows companies to avoid legal risks, reduce operational delays, and focus on business growth instead of regulatory challenges. 

Services Offered

Not all PEOs provide the same level of support. While basic services include payroll management, tax compliance, and HR administration, businesses should look for PEOs that offer the following services, too.

  • Finding and hiring top talent in competitive industries
  • Managing employment contracts to comply with Hungarian labor laws
  • Negotiating terms and drafting contracts accordingly 
  • Work permit & visa assistance for hiring non-EU employees
  • Legal advisory services
  • Termination & severance management
  • Ensuring competitive salary packages and handling tax filings
  • Handling disputes and exit procedures in accordance with the local law 

Partner with a PEO that offers all the services you require so you save yourself from any issues that may arise regarding foreign employees. 

Costing Methods 

Most PEOs in Hungary use two main pricing models. 

  • Flat Fee per Employee: You pay a fixed amount for each employee.
  • Percentage of Payroll: You pay a percentage of your total employee payroll costs.

While both methods are globally accepted, you must choose a PEO that best suits your budget. 

Reputation and Customer Service

Before you partner with a PEO, look into customer service quality, client testimonials, and reviews. A PEO with a strong reputation and a customer-focused approach helps your business run smoothly in a new market. Therefore, it’s wise to look into customer service quality, client testimonials, reviews, availability, separate representations for individual customers, and 24/7 support. 

Build Your Business in Hungary Without the Bureaucratic Roadblocks: Partner With a PEO

Expanding your business to Hungary is a great choice, but navigating labor market trends, recruitment processing, securing work permits, and understanding tax regulations are a few challenges you may experience when expanding into a new market. For your business operations to run smoothly, it is crucial to have local support by your side. 

A PEO can provide a fast and risk-free way to enter the Hungarian market, handling everything from HR administration and payroll to employee benefits and compliance with labor laws. By partnering with a PEO, you avoid bureaucratic hurdles, reduce administrative burdens, and focus on scaling operations in Central Europe. 

Having difficulty finding the best PEO service in Hungary? Our team at Remote People connects businesses with top PEO providers that offer comprehensive HR support, recruitment expertise, and payroll management solutions to businesses of all sizes.

With the right PEO partner, you can expand into Hungary confidently, hire top talent, and establish a strong business presence without unnecessary delays. Get in touch today and take the next step in your European expansion!

Frequently Asked Questions

Yes, PEOs operate legally in Hungary. Many companies rely on PEOs to outsource HR tasks while they focus on functional operations. 

Businesses of all sizes can benefit from a PEO. When you enter a co-employment arrangement with a PEO, you can outsource all the HR tasks, whether you are a small and medium enterprise, a startup, or a multinational corporation. 

Yes, Hungary regulates labor leasing under the Labour Code (Act I of 2012). While there is no standalone "Labor Leasing Act," staff leasing arrangements are legally permitted, allowing companies to lease employees from specialized staffing agencies. Specific rules for staff leasing agencies are outlined in government decrees such as 118/2001, ensuring compliance with Hungarian labor regulations.