Essential rules of minimum taxes and how to avoid over/undertaxation
Congratulations for successfully registering a company in Hungary! Once this first step flows through the various interconnected systems, your company is considered to be alive and active, and you as an owner are expected to personally contribute to the activities of the business. In the eyes of the Hungarian Tax Authority this means that your direct contribution to the business creates a social security status, which immediately requires the payment of social tax minimums.
Monthly minimum taxes are payable for each day of the ongoing contribution, during the whole life-cycle of the company. Minimum tax figures for 2025 are as followes:
| Minimum wage | Higher minimum | |
| Calculation base | 290,800 Ft | 348,800 Ft |
| Social contribution | 53,798 Ft | 64,528 Ft |
| Social tax | 42,530 Ft | 51,012 Ft |
| Total minimum tax | 96,328 Ft | 115,540 Ft |
Social contribution and social tax minimums are calculated using the minimum wage, therefore these figures increase when the minimum wage increases, which is normally annually from January. It complicates the situation that there are two different minimum wages in Hungary, and if your profession – what you directly contribute to the company with – requires any special education, then the higher minimum taxes should be applied. There is no exact list to help you decide this, and there are some surprising elements; most probably you will need a professional to provide you proper guidance.
Some examples:
- Owner is the chef in the restaurant – education is necessary, higher minimum taxes;
- Owner cooks in a buffet (no chef requirement by law) – no education required, normal minimum taxes;
- Owner deals with company accounting as well – education is necessary, higher minimum taxes;
- Owner is the managing director – no education required, normal minimum taxes.
- Owner is the managing director and does accounting, as well – education is necessary for one element, higher minimum taxes.
There are although many occasions when a company owner should not be considered socially secured under the company, and/or the minimum tax payments should not be applied.
No social security status:
- minority owner, who does not do anything in connection with the business activities, only pays shares, collects dividend
- foreign tax resident owner, company is not operational, there is no ongoing contribution, payout to the owner
No minimum tax payable (part-time social security):
- owner is employed full-time in another company (at least 36 hrs per week)
- owner works as a full-time entrepreneur
- owner is also an owner in another company, where social tax minimums are paid
- owner is a full-time active student
- owner is on pension
- owner is socially secured in another country with biliteral agreement
Application of the correct approach should be done by a professional, after a thorough discussion and understanding about the individual’s exact situation and available documentation.
In my past years I dealt with various scenarios and solved the situation for around a 100 entrepreneur and company owner. If you have any further questions, and need special assistance for your case please let me know in a short email or phone call.
