Immigration Policy Changes – January 2025

Hungary: Immigration Policy Changes – January 2025

1. Change in relation to employment with a guest worker residence permit and a residence permit for the purpose of employment without high level qualification

The "Government Decree 450/2024. (XII. 23.) Korm. of the Government on the Employment of Guest Workers in Hungary (hereinafter referred to as the Government Decree)" published in the 135th issue of the Hungarian Gazette of 2024 on 23 December 2024 entered into force on 1 January 2025. The regulation affects both the quota of foreigners who do not have university degrees and the range of countries.

The maximum guest worker quota will be reduced by half, to 35 thousand. Only new permits from 2025 should be taken into account in this year's foreign labor quota of 35 thousand.

As of January 1, the number of countries from which foreign labor can come at all has significantly decreased. Workers from far fewer countries can come to positions requiring at most a secondary education or a profession. The change in the rules affects agriculture less, because the rules regarding the residence permit of seasonal guest workers have not changed.

Guest workers from third countries typically took on jobs where it was difficult to find Hungarian workers anyway. Some companies that have already struggled with a labor shortage may feel the lack of foreigners very much. These are primarily manufacturing companies, as well as businesses involved in hospitality and accommodation. An important rule, however, is that foreign labor can still enter investments with priority national economic goals without restrictions and it does not effect foreigners with university degrees and matching positions related to their qualifications.

However, it is possible that relief will apply to workers from the Philippines. For this to happen, there must be a state-recognized organization or office in our country that undertakes to ensure that its citizens who violate the immigration rules return home. This option is open to all countries, but the Minister of Foreign Affairs and Trade must also announce that the conditions have been met. This has not happened in the case of the Philippines so far, meaning that Filipino workers cannot currently receive an employment and/or guest worker residence permit in Hungary.

The regulations regarding guest self-employed workers, i.e. those who do not work in Hungary as employees, have not changed; therefore, there will not be fewer foreign food couriers in Budapest this year due to the decree.

What does not change is that in addition to Ukraine and Serbia, citizens of the following countries can be employed with a National Card: Bosnia and Herzegovina, the Republic of North

Macedonia, the Republic of Belarus, Moldova, the Republic of Montenegro, the Russian Federation.

However, it is not possible to import new Vietnamese workers from this year, or to contract Indian bus drivers or agricultural workers. The emphasis is on new permits, because previously issued permits are valid, as they can be extended by a maximum of 1 year.

1. After 1 January 2025 – taking into account the exceptions stated in point II * – citizens of the following countries listed in Annex 1 of the Government Decree may be employed in Hungary with a residence permit for employment purposes and a residence permit for guest workers: Georgia and Armenia

Based on the Government Decree, citizens of a third country may also be employed in Hungary with a residence permit for employment purposes and a guest worker residence permit if the country has an organization or office in Hungary, recognized by the state by the given country, which undertakes to leave the territory of Hungary and return to this country in the event of non-compliance with the provisions of Hungarian legislation on the entry and residence of third-country nationals or the legal acts of the European Union. The minister responsible for foreign policy will list these countries in a notice to be published in the Official Gazette, which is an annex to the Hungarian Gazette. We are currently waiting for this.

• Different provisions in the case of residence permits for guest workers and residence permits for employment purposes initiated before 1 January 2025

In the case of residence permits for guest workers, Annex 1 to Government Decree 180/2024. (VII. 8.) in force until 31 December 2024 shall apply (with regard to citizens of the Philippines, the Republic of Indonesia, the Republic of Kazakhstan, Mongolia, the Socialist Republic of Vietnam, the Federative Republic of Brazil, Georgia, the Kyrgyz Republic, the Bolivarian Republic of Venezuela and the Republic of Colombia):

• by a third-country national holding a residence permit for employment purposes issued on the basis of Act II of 2007 on the Entry and Residence of Third-Country Nationals (hereinafter: the Harmtv.) valid on 31 December 2024, an application for the issuance of a guest worker residence permit submitted after 31 December 2024;
• an application for the issuance and extension of a guest worker residence permit submitted before 1 January 2025 by a third-country national holding a guest worker residence permit valid on 31 December 2024, and c) an application for the issuance of a guest worker residence permit pending on 31 December 2024.

• In case of applications for the issuance of a residence permit for employment purposes, Government Decree 450/2024. (XII. 23.) shall not apply:

1. a third-country national holding a residence permit for employment purposes valid on 31 December 2024 issued on the basis of the Harmtv. application for the issuance of a residence permit for employment purposes submitted after 31 December 2024,

• the extension of the residence permit for employment purposes submitted after 1January 2025 of a third-country national holding a residence permit for employment purposes valid on 31 December 2024, as well as the application for the re-issuance of the above-mentioned residence permit, and
• during the assessment of the application for the issuance of a residence permit for employment purposes pending on 31 December 2024.

The procedure initiated on the basis of an application for a guest worker residence permit or a residence permit for employment purposes recorded on the electronic interface for initiating immigration procedures (EnterHungary) until 31 December 2024 shall be considered ongoing if the payment of the procedure fee has been made no later than 31 December 2024.

We would also like to inform you that the procedure initiated based on the application for a residence permit for employment purposes received by the consular officer until December 31, 2024 shall be considered as ongoing.

The above changes do not affect the residence permit procedures for investment purposes and seasonal employment purposes.

1. Minimum Wage 2025

The Competition Sector and the Permanent Consultative Forum of the Government (VKF) have reached an agreement on the minimum wage and guaranteed minimum wage for 2025. The VKF has concluded a 3-year wage agreement, within the framework of which the figures for the minimum wage have become known until 2027.

Minimum wage and guaranteed minimum wage in 2025

The minimum wage will increase by 9%, and the guaranteed minimum wage by 7%. The minimum wage will increase by 9% from January 1, 2025, to HUF 290,800 gross.

• From January 1, 2026, it will increase by 13%, to HUF 328,600 gross,
• From January 1, 2027, it will increase by 14%, to HUF 374,600 gross.THE NET MINIMUM WAGE IN 2025 increased to HUF 193,400.

The minimum wage, also known as the skilled worker minimum wage, will increase by 7%, to HUF 348,800 gross.

• The net guaranteed minimum wage will increase to HUF 232,000.

III. Tightening the conditions of the new Hungarian settlement program

Unfortunately, it is no longer enough to obtain a ten-year residence permit if someone buys a property here for 500 thousand euros, but the program is not yet ready to start without this change. Based on the guest investor rules created by the government last year, foreign individuals should have met one of three conditions for a 10-year residence permit in Hungary:

• purchase investment shares from real estate funds registered by the MNB of fund managers approved by national security,
• purchase real estate located in the geographical area of Hungary worth at least 500 thousand euros,
• make a monetary donation of at least 1 million euros to a higher education institution maintained by a public-interest asset management foundation performing a public task.

However, the legislative amendment published on December 20, 2024, abolished the second option, i.e. direct property purchase, presumably in part to ease tensions in the housing market.

Guest investors are left with two options: making a cash donation or investing in a qualified real estate fund. However, the program has not attracted significant interest so far, partly due to more favorable alternative programs in other countries, such as Greece and Portugal.

The remaining options face several obstacles. There is only one qualified fund manager operating, which does not have significant references, while other fund managers who know the market well have not yet received the necessary licenses.

The only company already licensed, Sprint Asset Hungary (SAH) Zrt., received its license from the Hungarian National Bank in October 2024. November and December are considered dead periods in the market, so the program is expected to be up and running from this year, i.e. 2025. The company, founded in the spring of 2024, is owned by Chinese Lian Wang, who was also a key player in the most successful company of the previous Hungarian settlement program, the offshore company called Hungarian State Special Debt Fund (HSSDF).

Some fund managers are still working on the necessary constitutional protection license, for example Gránit Alapkezelő, which has already established and approved its target fund under the name Gravitas Hungary with the MNB.

IV. Changes in tax benefits for foreigners working in Hungary

Hungary usually offers various types of tax benefits to people working here. Starting from 1 January 2025, however, the three most prominent personal income tax benefits cannot be applied anymore to the salaries of most third-country nationals working in Hungary.

The change might be relevant to the foreigner in the following cases:

• If foreigner is a third-country national who is employed by a Hungarian company (except if you are Serbian or Ukrainian)
• If foreigner operates a Hungarian company and employ third-country nationals

The precise definition is that to receive the listed personal tax benefits, the employee must be either a citizen of an EEA member state or of a country neighboring Hungary. Out of the countries neighboring Hungary, only Serbia and Ukraine are not members of the EEA. As a result, it is relevant to all third-country nationals, except for Serbian and Ukrainian citizens.

• The new law is relevant not only to foreigners working in Hungary with a "guest worker residence permit", but many others as well.
• The new law is not relevant to workers who are citizens of EEA member states
• The new law is not relevant to Serbian and Ukrainian citizens

The new regulation on personal income tax concerns the following tax benefits:

• Tax benefit of those under 25 (no personal income tax, which is 15%)
• Tax benefit for the recently married (tax base decrease by HUF 33,335, meaning a net salary increase by HUF 5,000)
• Family tax benefit (tax base decrease based on the number of children, currently meaning
  a net salary increase of HUF 10,000, HUF 20,000, or HUF 33,000, but would increase from 2025)

If foreigner is currently receiving any of the above tax benefits, foreigner's net salary will decrease, even if gross salary stays the same. Out of these, losing the tax benefit of those who are not yet 25 years old might be the biggest cut, since the 15% personal income tax will be a significant decrease to your net salary.

If foreigner operates a company in Hungary

The new law does not affect company costs but it will only have an impact on the take home pay of employees. Since employers pay the employees' taxes directly to the Tax Authority,payroll records and workflows must be updated so only the eligible employees receive the listed tax benefits in the future.

The employer may decide if, in light of this, wants to give employees a higher raise than what was originally considered for the next year.

V. New TEÁOR

The TEÁOR'08 was in force until December 31, 2024, but the TEÁOR'25 codes are now available. Materials related to the new nomenclature can be accessed by clicking on the following links:

• TEÁOR'25 nomenclature documents,

• the search program keresőprogramja for the new TEÁOR'25 nomenclature, in which you can search by code number and text,
• the conversion program átkódoló program between the TEÁOR'08 and TEÁOR'25 nomenclatures, which provides assistance in reclassifying the old (TEÁOR'08) and new (TEÁOR'25) codes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.