There is no requirement to register a business in Hungary in order to work as a freelancer in Hungary. Common legal terms used for this type of work include sole proprietorship and sole trader.

Registering a sole trader (egyéni vállalkozó) in Hungary

Individuals who wish to start sole proprietorships are no longer required to submit an application for a sole trader license. In Hungary, a client gate system serves as an entry point to the computerized administration. This method enables you to take care of paperwork and register a corporation online, thereby streamlining a formerly laborious process. Before commencing the registration procedure, it is advisable to consult a tax professional, who can assist you in selecting an activity code and obtaining pertinent tax information.

To launch your single proprietorship, you must file a notice of commencement of operation. This can be accomplished for free via the client gate system or in person. This notice demands the submission of a valid photo identity, an official address card, your tax identification number, and a certificate or license (if your business requires it). The activity code of the business you wish to register is also required.

Once you have notified the state of the commencement of business activity, they will include you in the register straight immediately and send you the certification that certifies the beginning of your business; it comprises your tax number, the selected business activity, registration number, and your personal data. The lone trader permit that was originally necessary is now issued only upon your request, and it is free of charge.

After the issuance of this certificate, sole owners in Hungary can begin conducting business immediately. The newly formed sole proprietorship must register with the tax authorities; this process is free and occurs within 15 days of submitting an application for company registration. A foreign resident who has a valid residency permit in Hungary may register as a sole owner.

Next to his or her name or signature, the lone proprietor must always include the registration number and sole trader designation (or its abbreviated version, “e.v.”).

Hungary’s taxes on sole proprietorships (egyéni cég)

As a freelancer in Hungary, you’ll typically choose between two tax regimes:

Option 1: KATA (Simplified Tax Regime)

KATA is a flat-rate monthly tax for sole traders who meet the following conditions:

• Your clients are private individuals (not companies)
• You are a Hungarian resident
• Your annual income is under HUF 18 million

If you qualify, you’ll pay a fixed HUF 50,000 per month. This amount covers your:

• Personal income tax
• Pension contributions
• Health and social security

If you earn over HUF 18 million, you’ll pay an extra 40% tax on the income above that threshold.

Option 2: Flat-Rate or Standard Taxation (Átalányadózás)

If you don’t qualify for KATA, or you want to deduct business expenses, this system may suit you better. Here’s what you’ll pay:

• 15% personal income tax, applied to your taxable base (typically 60% of gross income, after a 40% fixed-cost allowance)
• 18.5% social security contribution
• 13% social contribution tax
• Up to 2% local business tax (HIPA)

This method gives you more flexibility if you have regular business expenses or work mainly with companies.

The contribution range for Hungary’s social security system is between 17.5% and 36%.

The advanced income tax rate of 15 percent, which is computed by applying the method to 90 percent of revenues, may be utilized by independent contractors.

VAT

In Hungary, you must register for VAT if:

• You import or export goods and services in or out of the country.
• You’re a Hungarian resident and your annual turnover exceeds HUF 18 million. Below that, you can opt for VAT exemption.
• You’re a non-resident (living outside Hungary) and doing business in Hungary – in that case, you must register for VAT regardless of your turnover.

The standard VAT rate in Hungary is 27%, with reduced rates of 18% and 5% for specific goods and services.

📝 Note: All paperwork must be submitted in Hungarian, which can be a challenge if you don’t speak the language.

An Easier Way: Use Abillio

Setting up your own sole proprietorship, dealing with VAT, and staying compliant with local rules can be time-consuming, especially if you don’t speak Hungarian or just want to start freelancing quickly.

With Abillio, you don’t need to:

• Register a legal entity
• Open a Hungarian bank account
• Apply for a VAT number

Abillio’s company-as-a-service model lets you start freelancing right away. We handle invoicing, cross-border payments (including crypto), and tax compliance under our existing company structure, so you can focus on your work, not on admin.

Note: This information is from official sources and should not be considered as a substitute for legal advice. Always check official websites or consult a lawyer or tax consultant before taking action.