According to our social security regulations there is no insurance liability for employees who are citizens of 3rd countries and are employed in the territory of Hungary by employers who are not registered in Hungary in case the work is done in frame of assignment, delegation or manpower lease contract and it lasts no longer than 2 years. This regulation cannot be applied again for employees who have already worked in Hungary and less than 3 years passed away since the end of the last employment.

The above mentioned regulation is in effect since 1st of January, 2012. Before this date there was no time limitation for the exemption of the insurance liability; so the whole period of the delegation was exempted from the Hungarian social security contributions.

The new regulation which is in effect from 1st of January, 2014 provides exemption above the 2 years limit in the following cases:
 the assignment, delegation or manpower lease relationship lasts longer than 2 years due to unexpected reasons (force majeure)
 the unexpected event (point 1.) happens at least after 1 year from the start of the employment in Hungary and the employee reports it to the tax authority within 8 days.

The exemption is related only to the individual contribution payment liability, but not to the social security contribution payable by the employer.

According to the interim regulations the 2 years period should be counted from 1st of January, 2013 in case of employees whose assignment, delegation or manpower rental started before 1st of January, 2013.

Let’s see what happens when the Hungarian employment started after 1st of January, 2013 and is planned for less than 2 years originally, but due to an unexpected reason it will last longer? Or in case the delegation started before 1st of January, 2013 and continued after 31st of December, 2014?
In the first case the employee is insured in the first 2 years, there is no social security contribution payment liability. However in case the employment last longer than two years, than according to the new regulations the employee remains exempted from the contribution payment because of the unexpected event. However the employer’s social security contribution should be paid retroactively from the 1st day of the employment.
In the second case the 2 years period starts on 1st of January, 2013 and ends on the 31st of December, 2014. If the employment relationship continues after this date due to unexpected reason than the exemption will remain applicable also after 1st of January, 2015 while the employer should pay the social security contributions retroactively from 1st of January, 2013.

All in all, employees coming from 3rd countries in frames of assignment, delegation or manpower rental can remain exempted from individual social security contribution liabilities at least until the 31st of December, 2014. The employer will have social security contribution liability only in case the employment relationship continues after 1st of January, 2015 but in this case the liability will be retroactively. And also don’t forget that the reason of the exemption’s extension should be reported to the tax authority after 1 year of employment, so first after 31st of December, 2013.

We hope you have found our summary useful. If you have any further question regarding to this topic, please do not hesitate to contact us.

Krisztina Kovács
UCMS Group Hungary