Employment

Social insurance lower limit from 1 July 2020

The new social insurance rules introduce a new minimum social security contribution under the name “Lower Limit for Social Insurance Contributions”, the legislation comes into effect from 1 July 2020.

 

In the case of employment, under the new rules, the contribution base is at least 30 per cent of the minimum wage per month (lower contribution limit).

The rule of the lower limit for the payment of contributions must, therefore, be examined in the case of employment in which the salary does not reach 30% of the minimum wage on a monthly basis (in the case of a broken month, the one-thirtieth of it shall be taken into the calculation per day).

The new rule does not differentiate between full-time and part-time employment. That is, even in the case of part-time work, 30% of the total amount of the minimum wage must be taken into account.

Whether an employee’s job requires a secondary education or a vocational qualification is still decisive in calculating the lower limit for the payment of contributions. If the answer is no then the minimum wage shall be used, but if yes then the higher amount guaranteed minimum wage is applicable.

The lower limit for the payment of contributions calculated on the basis of 30% of the minimum wage (currently HUF 161,000) is HUF 48,300 from 1 July 2020 in the case of employment.

The lower limit for the payment of contributions calculated on the basis of 30% of the guaranteed minimum wage (currently HUF 210,600) is HUF 63,180 from 1 July 2020 in the case of employment.

Accordingly, if the salary of an employee doesn’t reach the above amount, then their social security contribution shall be calculated and paid after the lower limit.

MINIMUM WAGEGUARANTEED MINIMUM WAGE
Employer taxes30%30%
Gross salary48 30063 180
– social insurance tax15,50%7 4879 793
– vocational training contribution1,50%725948
– total tax8 21110 741
Full employment cost56 51173 921
Tax deductions from employee
Gross salary48 30063 180
– personal income tax15,00%7 2459 477
– social insurance18,50%8 93611 688
– total tax33,50%16 18121 165
Net salary32 12042 015
Total tax per month24 39231 906

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