As of January 1, 2024, significant changes have been implemented regarding the social security contribution liability on incomes paid subsequently, such as bonuses, in respect of work performed in Hungary. These changes affect employees who, after having worked in Hungary, receive benefits later while being insured in another European Economic Area (EEA) Member State.

It was often the case that a Hungarian employer paid out some income after the termination of the employee’s insurance coverage in Hungary, which was then no longer taxable in Hungary. According to the new changes, if a benefit is related to work performed while the individual is insured in Hungary the income from that work – regardless of the date of payment – will constitute the basis for social security contributions. This rule applies even if the employee is insured in another EEA Member State at the time of the benefit payment.

Under the new rules, if the income is paid in respect of a period during which the employee was insured in Hungary, this income will also form the basis for social security contributions, even if the person is insured in another Member State when the income is paid.

This change ensures the alignment of social security contributions and social security taxes, and clarifies the tax liabilities of incomes paid later on for the work previously performed. The aim of these changes is to clarify taxation and make the tax consequences of employee mobility more transparent.

Details of this resolution can be found in document ATF-133/2024 of the Tax and Information Department of NAV (National Tax and Customs Administration of Hungary) and in the information provided by the Ministry of Finance.