Taxation of international employment - Expatriate services – tax return preparation for private individuals

In the case of multinational organizations it often occurs that certain employees perform work at another group member on a temporary basis. One of the objectives of this can be the promotion of exchange of experience on inter-company level or providing a direct supervision of parent companies at subsidiaries.

In connection with the seconded employees, specific reporting, tax payment and tax return obligations arise whose satisfaction requires great caution, as international tax principles and requirements and the tax law considerations of at least two separate countries must be taken into account.

In addition, the application of corresponding EU and Hungarian social security regulations must also be considered, together with compliance to the rules of registration, declaration and payment of contributions.

A new type of employment structure is also on the spread. It is becoming increasingly common that a foreign company employs labour force in Hungary without having any form of settlement (subsidiary, branch or trade representation) in the country. This has no legal constraints and is in compliance with four fundamental freedoms considered to be the foundation of the European Union.

Nonetheless, a thorough employer must be aware of the labour law and social security aspects related to this type of employment, together with the aspects connected to the personal income tax of the employee.

Working in Hungary has immigration aspects for third country national employees (for EU member states’ citizens these are registration obligations).

Using their expertise in the listed fields, our colleagues will provide both the home and the host company and foreign employers with assistance in order to meet all the obligations related to the employees seconded to Hungary or working there in another form of employment, as well as to ensure that the employment complies with the provisions of Hungarian legal regulations.

Our services

Personal meeting in connection with the seconded employee’s legal, financial, income, taxation, and social security issues at the beginning and/or at the end of the secondment
Definition of tax residence for the determination of total or partial tax liabilities
Determination of the state of social security liabilities (where should contributions be paid and where will the seconded employee be secured?)
Tax authority registration – requesting tax identification number (tax number)
Social security registration – requesting social security number
Legal support in the preparation of employment contract
Tax law interpretation in specific issues (e.g. tax liabilities of certain incomes)
Calculation of quarterly personal income tax advances
Preparation and submission of yearly personal income tax return
Calculation of monthly social security contribution and social contribution tax
Submission of monthly social security return
Checking the seconded employee’s tax account balance, submission of request of replacement of payments
Requesting tax authority certificates (certificates of tax and incomes, proof of residence)
Representing the seconded employee in other tax administration procedures before the tax authority (tax investigations, extraordinary tax assessment etc.)
Registering foreign employer as an entity obliged to pay contributions at the Hungarian social security authority
Registering employee working in Hungary of foreign employer into the Hungarian social security system
Regular information on the changes of laws
Application for EEA registration card
Application for residence permit for work purposes, national / EC permanent residence permit

If you have any questions related to our service, please do not hesitate to contact our colleagues directly or through your Forvis Mazars contact person.