Global Mobility Services for Employers

Key Challenges of Employing International Employees

Immigration coordination services for foreign employees and assignees

Hiring foreign employees in Hungary

Employing foreign individuals may trigger immigration, payroll, tax and social security obligations simultaneously.
Employers often need to assess local employment requirements, treaty implications and reporting obligations before employment begins. Without proper planning, even a simple international hiring structure can create unexpected compliance risks.
Our team supports employers in building compliant cross-border employment structures aligned with both local and international requirements.

Employee relocation challenges

Physical relocation and considerations are usually key HR topics. Yet, even before this, it is imperative to evaluate and set the immigration landscape. Mostly it is important to assess what immigration permit types are available in case the individual has third country citizenship. Hungary has strict immigration regulations and it is more than advised pre-assessing the possibilities first, so that a proper immigration paperwork can be prepared, which will ensure smooth travel, residence and renewal, if necessary.

International payroll management for cross-border employees

Supporting global workforce mobility through integrated tax and compliance advisory

Double taxation risks

Tax residence position affects taxation of worldwide income. If tax residence remains unchanged, tax implications of the move still might likely be triggered. Thus, to avoid tax risks, it is always necessary to think and decide on i) whether it is necessary to allocatee income for tax purposes between countries; ii) whether it is necessary to allocatee income for tax purposes between countries; iii) how any double taxation situations can be avoided on a bilateral treaty level, or in lack of a treaty, it should be evaluated what domestic legislations (in the host and home countries respectively) offer.

Social security compliance

While healthcare coverage is often seen as a baseline for even starting discussion about foreign work, it is often mixed with proper assessment on which country the individual should be covered in for social security purposes. While practically an insurance policy can give trust and confidence for the individual in case of any healthcare issues triggered abroad, long-term thinking and compliance questions often lag behind. While EEA level harmonization of social security systems exists, it is not an automated system. Totalization agreements can come into play with third countries. Also, national legislation can vary widely in terms of compliance requirements as well as applicable rates that can heavily affect overall cost of a project. All of these suggest that cautions info gathering and decision process is suggested for social security considerations, too, even before the move takes place.

Hiring international employees and managing cross-border employment obligations

Managing executive compensation and international incentive plans

Payroll complexity

Who will pay the salary? Will the host company provide any benefit in cash or in kind? Any bonuses are due? Cost of living allowance, housing support is part of the compensation package? Group KPI-based bonuses are due? Share based compensation are available? Tax protection or equalization apply?

These are only a part of the questions that need to be monitored and assessed before move to address any compliance risk covering payroll matters. Not reporting income properly easily trigger tax and social security compliance risk and the least hoped situation for an expat is to being investigated by a local tax authority for missing proper income reporting, that often embedded and built upon local (or shadow) payroll.

Remote work risks

Working remotely is a 21st century thing. Modern IT infrastructure enables high volume of workers to perform work – to borrow a trendy buzzword – practically from anywhere. Yet, if the country of actual work performance differs from the country with which the employee concluded a contract for work serious consequences might be triggered. It is imperative that employers are aware in which country the actual work is or planned to be performed and implement controls, reporting channels, escalation points and show-stoppers should the case necessitate and compliance risks are detected.

Compliance support for international business travel and short-term assignments

Employee relocation support including tax, payroll and immigration considerations

Permanent establishment risks

Foreign work shall be evaluated not only from the individual’s perspective. Even if immigration, relocation, payroll administration, tax and social security aspects are assessed and acted upon best considerations, the enterprise itself is urged to consider permanent establishment risks. A permanent establishment could be created by the presence of an employee abroad, but conditions can vary and differ country by country as practically regulated by double tax treaties. CIT and VAT exposures are the most common which could be very substantial. We recommend checking possible PE risk in all cases when an employee works in another country.

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Integrated Global Mobility Support for Employers

We feel that human reach is the best to assess one’s tax situation. We ask, collect information in a flexible way and with an open mindset. We prefer to speak and discuss yet we are focusing on written policies and client expectations and review the situation as a whole in the light of the statutory rules.

Employment tax advisory

Comprehensive review of an individual’s personal and professional circumstances makes it possible to determine tax residency, and – based on this – understand tax liability of various income (sourced from anywhere). Tax administration is regulated by the country of residence or of the work, sometimes both. With the help of our international network we are able to scan and advise on all aspects of personal taxation for an internationally mobile person.

Payroll support

Payroll can be interpreted as tax administration method of the income provided in exchange of a work performed for the benefit of a company. Payroll set-up should be established on proper evaluation of an individual’s tax position and should respect the local administration rules by considering international nature of the case. Often parallel payrolls are ran and it is imperative that both operate in a compliant manner, by considering local regulations and treaty considerations at the same time. We have extensive experience on setting-up international aspects in local payroll and can advise employers on operational specifications, too, with involvement of our local payroll outsourcing department as support.

Social security advisory

Social security is often embedded in the payroll operation, yet separate and independent evaluation is always suggested so that payroll could implement social security compliance as form the start of the international mission. Our comprehensive approach always considers and reflects to possible social security implications and include guides on suggested actions.

Immigration coordination

This aspect cannot be emphasized enough. Having a proper immigration title based on which a third country citizen enters the country is key. Rules in Hungary became very strict as from 2024, with the implementation of the new legislation, thus case assessment is a must before, practically, anything, to make sure that the candidate in fact is eligible to enter the country and perform work at first place. We put huge emphasis during our discussions with clients on which permit to chose and why and which will not work even if preferred.

Remote work compliance

Some countries have shadow payroll obligations. Hungary has specific tax and compliance requirements in case work is performed from Hungary for the benefit of a foreign employer. While the Hungarian team can provide full service in the compliance area of foreign employers having Hungarian workforce performing their work in Hungary, we can also offer global services through our network, should cross-border remote work would be set up the other way around.

Tax planning

We help planning via consulting about facts and expectations and make it possible that companies and individuals tailor their actions to the statutory requirements. We do not perform investment-advisory or wealth management focused tax advisory, though.

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Managing remote employees working across international borders

Common Global Mobility Scenarios We Support

When employing a foreign individual, we suggest pausing before sending the offer and raise the below questions:

Are we sure that the individual should work in Hungary / remotely from abroad / perform in a multi-state working schedule?
Am I confident that the candidate is indeed eligible to enter, reside and work in all countries concerned?
Is the payroll, tax and social security landscape is clarified and agreed upon and are the respective stakeholders (internal or third party) are notified in advance, so that processes can be commenced seamlessly?

If the answer to any of the above questions is “no”, “not quite” or “I do not know”, please, contact us.

Sending Hungarian employees abroad

If your company assigns an employee to perform work abroad, please always consider if any preliminary or simultaneous registration or permit is necessary for entering the country concerned or to perform work there. Please remember that even within the EU, registration obligations apply for international assignments, even for short-term ones. Do not forget that a 183 days presence in a foreign country almost certainly triggers foreign tax obligation and social security should usually be administered and supported by proper certificate if insurance is maintained in the home country. If you are unsure about what to consider, how to start any of these processes, Forvis Mazars is the right contact to inquire at.

Managing remote employees across borders

Does you company engage an individual based abroad to perform specific tasks for the company’s benefit? Is it pre-sales? Marketing? HR? Finance support? Whatever the role is, the pure physical presence of this individual raises compliance questions around salary, taxation, payroll and social security, not mentioning permanent establishment considerations. To avoid financial and reputational risks we suggest pre-assessing all relevant aspects before engaging cross-border workers. For details, please contact our colleagues.

Supporting executives with cross-border compensation

Any of the employees or key executives of your company are engaged in international compensation schemes? Stock options, SAR, RSU, phantom share are sort of buzzwords that are appearing amongst group communication, but you are not familiar what to do with them? We can help to sort it out how these may affect you, your organization, your employees participating in such compensation programs and what tax implications they might mean to the individuals and for your organization. Let us know, if this question is relevant.

Short-term business travel

Even a short-term business travel can trigger compliance or reporting obligations. If you are unsure, our team is your choice to find out. Similarly, if taxation of benefits provided for these occasions are ambiguous, let us know. We will clarify.

Global mobility coordination

Is global mobility a common thing at your organization? If you require a partner who adds tax and immigration layers to your business and HR focused planning, let us know. Do you wish to outsource global mobility tax, social security and immigration tasks and lay these in an expert’s hand? Let’s consult on what approach we can offer and how Forvis Mazars can help.

Why Choose Forvis Mazars for Global Mobility Support?

Global reach
100+ countries and territories
Integrated expertise
Tax, payroll and mobility advisory
Local knowledge
Deep understanding of Hungarian regulations
Coordinated delivery
Consistent support across jurisdictions

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Social security compliance support for international assignments

Frequently asked questions

What should companies consider before hiring foreign employees?

Baseline is immigration. If a proper permit is available (or no permit is necessary), then the place of employment and tax residence are the most important topics to consider so that proper payroll processes could be set up. As these aspects arise on the first day of employment at the latest, careful planning is inevitable.

Does hiring international employees require local payroll registration?

Depends. Term of the employment, and double tax treaty provisions together with domestic legislation needs to be reviewed carefully so that it can be assessed what payroll administration and connected implications an international employment scenario could trigger

Can remote work create tax risks for companies?

Yes. CIT PE, in certain cases VAT PE might be generated through the cross-border remote work scenarios. On top of that, payroll administration, social security and personal income tax administration concerns are almost certain to arise.

How are internationally mobile employees typically taxed?

Employment income is usually taxable in the country where the work is performed. Yet, the term of the foreign work, the employee’s tax residence position and other factors might affect taxation, so careful consideration needs to be introduced to assess proper tax treatment.

What are the main risks of employee relocation projects?

On top of PE, payroll and compliance risk highlighted earlier, employer branding considerations apply. One would definitely not be happy with a foreign assignment if tax authority inspections would rob their time, neither if they are expelled due to inappropriate immigration paperwork.

When can cross-border work create reporting obligations?

Even short-term business travels can trigger certain reporting obligations, but mid-term and long-term assignments definitely. Not only payroll and immigration reporting obligation apply, but domestic and international legislation can introduce additional reporting, too, like posting reporting related to international assignments within the EU. We also know various reporting requirements introduced in the Hungarian legislation connected to assignments counterparts of which most likely exist abroad.

Why is executive compensation more complex internationally?

Because the program organizer and the program operator are often differ from the legal employer. Compensation programs and pre-set factors might not be properly communicated, employee education might lack local specificalities and withholding or sale-to-cover considerations could be incorrectly implemented, all of which might necessitate to involvement of an advisor to sort out.

How can companies reduce international payroll complexity?

Complexity cannot be reduced but awareness and compliance can be achieved through careful planning.

What should employers review before relocating employees internationally?

After business needs and reasons are set, immigration possibilities are key. Without being allowed to enter the foreign country it is impossible to speak about relocation, too. Home and host country payroll modifications, set-up and roadmap are also important to grant a smooth work condition and to elaborate compliance risks.

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