As mentioned above, Hungarian authorities and the courts are entitled to re-characterise contracts. The taxes and social contributions are higher in cases of employment relationships. The employer‘s obligations for employees (e.g. when terminating the relationship) are more onerous. Thus, independent contractor relationships are more popular but the authorities and the courts can easily detect the sham agreements if in dispute.
The Hungarian courts have frequently re-characterised independent contracts in the previous years. However, if the details of the relationship did not show the primary employment factors, then the courts have refused to qualify it as employment. For example, in a case where accountants worked for fixed monthly fees, for 10-20 hours per month, partly in the principal’s office, and partly at home, the Supreme Court decided that the relationship was an independent contractor relationship due to the lack of hierarchy and lack of detailed instruction.