Navigating Hungary's Business Travel Regulations: An HR Perspective

Hungary has emerged as a strategic investment hub in Central Europe, attracting numerous international companies with its EU membership and stable economic environment. However, navigating the country's labor laws and tax system presents significant challenges for employers, particularly regarding business travel allowances, expense reimbursements, and tax compliance requirements.

Understanding Hungary's Legal Framework

Hungarian employment regulations are primarily governed by the Labour Code (Act I of 2012) and the Personal Income Tax Act (Act CXVII of 1995). These laws establish a balanced framework protecting employee rights while maintaining employer flexibility. Key considerations include:

Employment Contracts: Both fixed-term and indefinite contracts must clearly specify compensation, benefits, and business travel arrangements
Minimum Wage Standards (2025): Approximately 290,800 HUF monthly for standard positions and 348,800 HUF for qualified professionals
Social Security Contributions: Employers contribute 13% social contribution tax covering health insurance and pension schemes
Income Tax Rate: Employees pay a flat 15% personal income tax

Domestic Travel Allowances and Taxation

Hungarian regulations distinguish between taxable allowances and exempt reimbursements for domestic business travel. According to Section 51(2) of the Labour Code, employers must compensate employees for reasonable expenses incurred during work-related travel.

Minimum Daily Allowance: 500 HUF (approximately 1.3 EUR) considered taxable income subject to 15% income tax and 13% social contributions
Documented Expense Reimbursement: Actual expenses supported by receipts (meals, accommodation) can be exempt from taxation without monetary limits
Eligibility Requirements: Travel must exceed 6 hours; no allowance payable if employer provides meals
Transportation Sector: Special daily allowance of 9,000 HUF for drivers and cargo managers, subject to standard taxation

International Business Travel Provisions

For international assignments, employers have flexibility in setting allowance amounts, though specific tax rules apply:

Tax-Free Component: 30% of meal allowances exempt up to 15 EUR daily; excess amounts subject to 15% income tax
Duration Threshold: No allowance payable for trips shorter than 8 hours
Currency Conversion: Employers may use National Bank of Hungary exchange rates from either the 15th of previous month or payment date
Transportation Professionals: 85 EUR daily allowance for international drivers, fully taxable

Travel Expense Reimbursement Procedures

Employers must reimburse documented expenses directly related to business activities, including transportation tickets, communication costs, and toll fees. Advance payments require employee consent and proper currency conversion documentation.

Mileage Reimbursement Guidelines

Updated 2023 regulations establish tax-free mileage rates for business use of personal vehicles:

Business Travel: 15 HUF per kilometer (approximately 0.04 EUR)
Commuting Allowance: 18 HUF per kilometer for urban travel; 30 HUF for intercity journeys
Documentation Requirements: Detailed records including trip purpose, odometer readings, dates, and vehicle information

Digital Record-Keeping Compliance

Hungary's Accounting Act and Government Decree 451/2016 mandate strict digital documentation standards:

Retention Period: 8-year document preservation requirement
Accessibility Standards: Immediate retrievability with prevention of unauthorized alterations
Digital Implementation: Scanned documents require electronic signatures and verification statements

Best Practices for Employers

To ensure compliance and optimize tax efficiency, companies should implement comprehensive travel policies:

Develop clear travel policies distinguishing between allowances and reimbursements
Implement robust digital record-keeping systems meeting Hungarian standards
Conduct regular tax filings with the National Tax and Customs Administration (NAV)
Provide employee training on documentation requirements and compliance procedures

Professional Support Solutions

Companies operating in Hungary can benefit from specialized HR support services that ensure compliance while optimizing operational efficiency. SailGlobal offers comprehensive Employer of Record (EOR) and Professional Employer Organization (PEO) solutions tailored to the Hungarian market, providing expertise in local labor regulations, tax optimization strategies, and compliance management.

By understanding Hungary's complex regulatory environment and implementing proper procedures, international companies can effectively manage their workforce while minimizing legal risks and maximizing operational efficiency in this dynamic European market.

Hungary Business Travel Regulations: HR Guide to Allowances & Tax Compliance