We provide payroll services to small and large companies in Budapest. We run payroll for more than 2,500 employees a month, from the simplest monthly salaried workforce to multi-shift production with working time banking. On this page we explain what payroll actually covers, what a payroll specialist does, and when outsourcing is worth it.
What is payroll?
Payroll is the calculation and settlement of employees’ wages and other entitlements. Starting from the gross salary, it means taking account of premiums, benefits and absences, deducting taxes and social security contributions as the law requires, arriving at the net pay, preparing the returns and issuing the payslips.
In practice it is more than calculation. Hours worked have to be collected, holiday, sick leave and sick pay have to be handled, cafeteria benefits, bonuses and fringe benefits have to be settled, public charges have to be calculated, the transfer has to be prepared, and finally the reports to the authorities have to be filed. Payroll is therefore a regulated process rather than a calculation task, and its errors cause financial, legal and employee trust problems all at once.
What does a payroll specialist do?
The payroll specialist is responsible for every step of the monthly cycle:
- collects and checks attendance and absence data
- keeps records of new hires, leavers and changes to employment contracts
- calculates gross and net pay, premiums and deductions
- prepares the payslips and the bank transfer files
- files the returns and data reports due to the Hungarian tax authority (NAV)
- answers pay-related questions from employees and management
The harder part of the work is rarely the calculation. The harder part is deciding which rule applies in a given situation.
Why outsource payroll?
Hiring, training and covering for an in-house payroll specialist is a fixed cost, while the rules change from year to year. With outsourcing, the expertise, the software maintenance and the responsibility all sit with the provider, and payroll does not stop when one person goes on holiday or resigns.
Payroll outsourcing: who is it for?
Mainly for Hungarian operations with an international background.
The Hungarian subsidiary of an international group
Here payroll does not stop at the Hungarian filings. The parent company needs the group report on time, personnel costs broken down according to the group’s accounting structure, and information in English that a foreign controller or HR manager can understand. We handle that layer too, not only local compliance.
A foreign employer with Hungarian employees and no local entity
It is common for a foreign company to employ people in Hungary without setting up a Hungarian entity. In that case we take over the full payroll administration: the registrations with the authorities, the tax and contribution obligations, and compliance with Hungarian law. Employees receive a proper payslip in Hungarian.
Who it is not for
For a purely domestic workforce of fewer than ten people on monthly salaries, our service is more expensive than the market average, and you probably do not need the expertise you would be paying the difference for. In that case we are happy to point you to another solution. The exception is a complex work schedule or an international element. Then it is worth talking regardless of headcount.
If you would like to read more about exactly when outsourcing payroll is worth it, see our article.
Why it matters who runs your payroll
Our team answers questions like these without bringing in an outside expert:
- Which country’s social security legislation applies, and where does a tax liability arise, if an employee spends three months at the German subsidiary?
- How should working time banking be settled if the employment ends before the banking period closes?
- How does the cap on the social contribution tax work if the owner-manager receives both salary and a dividend in the same year?
That said, we do not claim to be the answer to everything. We bring in a tax adviser or a lawyer, and we always tell you in advance, if the question is about setting up a cross-border structure, the creation of a permanent establishment, an employment law dispute, or a request for an individual ruling from the authorities. Recognising where that line runs is itself a mark of expertise.
Our specialists
Expertise here does not depend on a single colleague. Payroll is run by a team, and the professional direction and the responsibility sit at partner level.
Szilvia Sarkadi-Nagy, partner and founding member. She is responsible for leading the payroll business line. In addition to her degree in accounting, she holds a degree in labour and social security administration from the Faculty of Law of Eötvös Loránd University (ELTE), specialising in social security administration, and she is also a qualified social security officer.
Ildikó Kovács is our expert payroll specialist, in other words one of the colleagues whose hands your payroll may actually pass through. In 2012 she won the Payroll Specialist of the Year title in a competition organised by the Hungarian Chamber of Auditors, the Hungarian Association of Certified Tax Experts and the Club of Accounting Firm Managers, where almost two thousand people entered the first round. Eleven reached the final. Ildikó has been part of our team ever since.
The group also employs colleagues with tax adviser and auditor qualifications, so a question that comes up stays in house. You can read more about our team here.
Capacity: what high volume proves
We run payroll for more than 2,500 employees a month, typically in multi-shift production environments with working time banking. That is the proof that our systems and processes hold up under load:
- machine processing of online attendance sheets, with no manual re-typing
- automated, controlled settlement of shift premiums, night premiums and overtime
- bulk preparation of transfers in bank format
- handling new hires, leavers, sick pay and other change reports in large volumes
- secure payroll lists and attendance sheets, available online
Social security benefit paying agency (kifizetőhely)
An employer with at least 100 employees who are entitled to cash health insurance benefits has to set up a social security benefit paying agency, known in Hungarian as a kifizetőhely. These tasks may, however, be carried out by another organisation on the employer’s behalf, under an agreement to that effect. We take this on: assessing, calculating and reporting sick pay, maternity benefit, child care fee, adoption fee and accident sick pay stays with us.
Why a price per employee is misleading
In payroll, the error rarely comes from someone typing in the wrong number. Far more often it comes from nobody realising there was a question at all. A cheap quote is often cheap because nobody priced in the risk, and that risk does not disappear. It simply moves to you. A missed self-revision, a mishandled posting abroad or an error found during an inspection of the paying agency can cost more than several years of the price difference.
What is included in our fee:
- representation during tax authority and paying agency inspections
- answers to professional questions within the contracted scope
- payslips, reports and written communication in English
- group reporting in the parent company’s structure
- professional indemnity insurance, set out in the contract
- compliance with the international quality control system of MGI
How payroll works in practice
We have kept paper-based administration to a minimum: data reaches us through an encrypted online file sharing platform.
- Data collection: digital processing of attendance sheets and change reports.
- Payroll calculation: gross and net pay, premiums, overtime and benefits.
- Tax and contribution returns: meeting the obligations towards the tax authority on time.
- Payslips and reports: transfer files, statements, group reports.
Every payroll run is produced through a controlled process.
International background: MGI Worldwide
Through our MGI Worldwide membership, our clients can count on us beyond the Hungarian border as well. If your company plans to employ people abroad, we organise the foreign payroll administration through the network’s local member firms, to the same quality standards.
For our payroll clients we also hold exclusive business breakfasts, and once a year a full tax conference on the latest tax and payroll changes. You can find our events here.
Frequently asked questions
How long does it take to take over payroll from another provider?
It can be done during the year, typically with about one month of lead time. The handover requires the opening data and the year-to-date cumulative figures.
When is it worth outsourcing payroll?
When you want to free up time and internal resources while making sure you stay compliant. Typically when the work schedule or the benefits system is complex, or when there is an international element involved.
Do you take over the tasks of the social security paying agency?
Yes, under an agreement to that effect. That way you do not have to employ and cover for your own social security specialist.
Do you represent clients during tax authority inspections in payroll matters?
Yes. We have taken part in many tax authority and paying agency inspections. For legal questions we involve our partner law firms.
Do you have professional indemnity insurance?
Yes, and it is set out in our contracts. We also have to meet MGI’s international quality control processes on a regular basis, which is a further control.
Who has access to payroll data?
Only the dedicated payroll specialist and the team leader. Data is stored in an encrypted system, in line with our GDPR privacy notice.