Expert Guide on Use of outsourced IT personnel in Hungary

Yes.

Yes.

Yes. 

Yes, common.

It is advisable to contract IT staff through intermediaries (IT outsourcing companies), in which case the risk of re-qualification into employment and tax risks can be reduced.

In general low, however this risk should be considered on a case-by-case basis. The risk of re-qualification into employment depends on various factors that need to be carefully evaluated. In general, if the IT specialist is contracted for a certain task or project, the risk of re-qualification is low. However, if the IT specialist is contracted to take the position of an IT specialist that involves the continuous performance of various tasks arising from that position, the re-qualification risk is high. To exclude this risk, it is advisable to contract IT staff through an intermediary IT outsourcing company

No. 

If several IT professionals are contracted directly for a permanent period, a local presence is advisable to comply with rules regarding investments by foreigners in Hungary. 

N/A

No. 

Not recommended. Leasing an office directly without having a local presence can create a risk of a permanent establishment, and unnecessary tax risks. It may also increase the risk of re-qualification into employment. This should be analysed on a case-by-case basis.

Not recommended. Compensating a contractor (intermediary) for leased premises may increase the risk of re-qualification into employment. This should be analysed on a case-by-case basis.

Contractor agreement with appropriate IP assignment and licence clauses. GDPR applies to the IT specialist/intermediary if the foreign customer, the IT specialist/intermediary, or both of them have an establishment in the European Union.

IT services agreement with appropriate IP assignment and licence clauses. If the IT specialist processes personal data on behalf of the foreign customer, GDPR will apply and a data processing agreement will have to be concluded (see the remarks above).

Yes.

No.

No.

‘Work for hire’ is not recognised in Hungary within the meaning of the US concept. As mentioned below, the economic copyrights to the software can be transferred.

IP assignment agreement and licence agreement depending on the case. As a general rule, copyrights are not transferable under Hungarian law. However, copyright to software is an exception. Where non-transferable copyrights are concerned, an exclusive, perpetual and irrevocable licence should be granted. The licence agreement must be in writing, which means a wet-ink agreement or electronic document signed with advanced or qualified e-signature.

Yes.

Yes.

The limitations set forth in the Rome I regulation should be considered: where a choice of law is made and all other elements relevant to the situation are in a country other than the country whose law has been chosen, the choice of law should not prejudice the application of the provisions of the law of that country, which cannot be derogated from in the agreement.

Yes.

The Hungarian Civil Code expressly recognises the concept of warranty. Indemnity is not expressly recognised. As a result, the general rules of the Hungarian Civil Code regarding a breach of contract apply. It is worth noting that while the Hungarian Civil Code may not explicitly recognise indemnity as a separate concept, it is common for contracts to include such provisions, and it is widely accepted in practice, even if it has not been tested in court yet.