Hungary – Self-Employment

How does self-employment work for expats in Hungary?

Whether you describe yourself as a freelancer, a sole trader, or an independent entrepreneur, the Hungarian term for this arrangement is “egyéni vállalkozás” — a structure that gives you full control over the scope, timing, and clients of your work. The legal foundation for this form of business is the 2009 CXV Act, which takes a unified view of the owner and the enterprise: there is no separation between the individual and their sole business — both are treated as a single natural person under the law.

Citizens of EU and EEA member states have the same rights as Hungarian nationals when starting a business and may register as sole traders without applying for a work permit. Non-EU and non-EEA nationals can also pursue self-employment in Hungary, but are typically required to hold a residence permit specifically covering self-employment, which involves demonstrating that certain financial and operational criteria are met.

Non-EU citizens may set up a private enterprise provided their residence permit falls into one of the qualifying categories — “study”, “gainful activity”, “employment”, or “family reunification”. A permit granted under “other reason” does not confer the right to operate a private enterprise in Hungary. This distinction is frequently overlooked by newcomers, so it is important to verify your permit category with the Hungarian Government Portal or the National Directorate-General for Aliens Policing (NDGAP) before you proceed.

One critical aspect of operating as a sole entrepreneur in Hungary is unlimited personal financial liability for business debts. Your personal assets and your business are treated as legally indistinguishable, which mirrors the position of sole traders in many other countries. If shielding personal assets from business risk is a priority, a corporate structure offering limited liability would be a more prudent choice.

What are the different self-employment and business structures available in Hungary?

Hungarian commercial law provides a range of recognised business forms, with the limited liability company (Kft), the joint-stock company (Rt), and various partnership types (Kt and Bt) being the most established. For individuals working alone, the sole proprietorship (egyéni vállalkozás) offers the most direct route. The table below outlines the principal options:

The private limited company — the Kft — is by far Hungary’s most widely used corporate structure, accounting for roughly 80% of all registered commercial entities. It is the preferred vehicle for foreign-owned operations, and there is no restriction on foreign individuals or entities holding ownership. You may appoint yourself or another non-Hungarian as managing director. The law does require that every company maintain a registered office address in Hungary and keep proper accounts, but ownership and management are not contingent on residency.

The sole proprietorship suits individual operators well, though the absence of liability protection is a notable drawback. A limited partnership (Bt) involves one partner with unlimited exposure and others whose liability is capped at their capital contributions. The Kft is functionally comparable to a GmbH in Germany, a SARL in France, or a private limited company in anglophone jurisdictions — it exists as a distinct legal entity, keeping your personal finances separate from those of the business.

Most freelancers gravitate towards the sole proprietorship as the simplest and most accessible option, though general and limited liability partnerships also have their place. The right structure depends on your specific circumstances, so professional advice from a business consultant or attorney is worthwhile if you are uncertain.

How do you register as self-employed in Hungary?

Hungary has earned a reputation as one of Europe’s more accessible countries for freelancers, largely because the entire registration process can be completed online in a single day at no cost. The system runs through the government’s Ügyfélkapu (Client Gate) portal. The sole trader permit that was previously a separate requirement is now issued only on request and is free of charge. You should verify current requirements and fee structures with the Hungarian National Tax and Customs Administration (NAV) or the Hungarian Government Portal.

1. Confirm your eligibility and residency status. You must be at least 18 years old. Hungarian and EEA citizens, along with registered Hungarian residents, may register directly. Non-EEA nationals are also eligible provided they hold a valid residence permit that authorises self-employment activity.
2. Obtain a Hungarian tax identification number (adóazonosító jel). Securing a personal tax number is the first step. You will need to visit a local NAV office and bring your passport along with evidence of your Hungarian address.
3. Establish a registered address (székhely). Your sole enterprise must have an official legal seat address in Hungary. If you are renting, your landlord must be made aware and must provide a written consent declaration. Registered seat service providers are also available, and NAV publishes a list of approved providers on its website.
4. Select your business activity code (TEÁOR/ÖVTJ). You will need to identify the activity code that corresponds to your intended business. If your chosen field is regulated — such as healthcare, law, or financial services — you will need to present the appropriate professional certificate or licence.
5. File your registration notice through the Ügyfélkapu portal. Submit notification of the start of your commercial activities via the Client Gate system online, or attend in person at the relevant state institution. You are entitled to begin trading on the same day you submit your online notice.
6. Receive your registration confirmation. Once the state registers your notice, you will be added to the register immediately and receive a certificate confirming the commencement of your business, including your tax number, chosen activity code, registration number, and personal details.
7. Register with the tax authorities and select a taxation regime. Your new sole proprietorship must be registered with NAV within 15 days at no cost. At this point you will elect your tax treatment — KATA, átalányadózás (flat-rate), or standard SZJA — details of which are covered in the tax section below.
8. Register for VAT where applicable. Sole traders whose total revenue remains below HUF 18,000,000 may qualify for VAT exemption (alanyi adómentesség). Those who exceed this figure must register for VAT with NAV.

As of 2025, registration as a sole trader is free of charge and can be finalised on the same day via the online portal. Where your activity requires a specialist licence, allow additional time and budget for that process. Always refer to the NAV website for the most up-to-date thresholds and procedures.

How do you set up a company in Hungary as an expat?

Foreign nationals may hold 100% of the shares in a Hungarian Kft, and the liability of each owner is confined to their share capital contribution. A Kft can be founded by a single individual or multiple shareholders and requires a minimum share capital of HUF 3 million (approximately €7,700 to €8,000 as of 2025). Once the company is registered, this capital is available for business use rather than being permanently frozen. Company registration is handled through the Hungarian Company Register (Cégbíróság).

1. Select the appropriate legal structure. For the majority of small and medium enterprises, the Kft is the default choice given its liability protection and relatively straightforward registration.
2. Verify your proposed company name. Before beginning the formation process, confirm that your preferred name has not already been registered. The Hungarian Trade Register at e-cegjegyzek.hu allows you to search existing registrations. The designation “Kft” must appear as part of the company’s official name.
3. Engage a qualified Hungarian attorney. Company formation begins with the preparation of founding documents, and this activity requires a licensed Hungarian attorney-at-law. Legal representation is mandatory throughout the entire process, and both the deed of foundation and the registration application must bear the countersignature of an attorney or notary.
4. Prepare the Articles of Association (Deed of Foundation). The Articles of Association must set out the founders, registered address, business activities, share capital, and management structure. An attorney must countersign this document; bilingual versions are commonly prepared for foreign founders.
5. Secure a registered office address in Hungary. A Kft cannot be registered without a valid legal seat address in Hungary. Many international founders use virtual office providers and retain a local accountant for ongoing administration.
6. Deposit the share capital into a temporary bank account. Where share capital is being contributed in cash, the bank will open a temporary account to receive the founder’s deposit and will issue a certificate confirming that the funds have been received.
7. Submit the application to the Company Registry. Hungary’s Company Register (Cégbíróság) operates electronically. Submissions are typically made by an attorney or authorised representative through the official portal, and electronic filings are generally processed more quickly. Registration ordinarily takes one to three business days.
8. Receive your registration and tax numbers. Upon approval, you will be issued a company registration number, tax number, and EU VAT number.
9. Open a Hungarian business bank account. A Kft is required to open at least one HUF business bank account in Hungary within 8 days of registration. This account must be opened in person — remote account opening is not permitted, meaning at least one visit to Hungary is required for founding directors.
10. Apply for any sector-specific licences. Certain industries — including finance, healthcare, and food services — require additional permits or authorisations before operations can legally commence.

As of 2025, Kft registration costs approximately €150, with attorney and notary fees ranging from €500 to €2,000 depending on the complexity of the setup. Comprehensive formation packages, which typically include legal work, address services, and tax number registration, generally run from €1,800 to €2,500. Always confirm current figures with a registered Hungarian attorney or the Company Register. Foreign-language documents will generally require a certified Hungarian translation and, in many cases, an apostille.

Can you work as a digital nomad in Hungary?

Hungary’s digital nomad programme — officially called the White Card — is designed for location-independent professionals who want EU residency without relocating their employer or incorporating a local business. The White Card has been operational since November 2021, making it one of the more established programmes of its kind in Europe. It is broadly comparable to similar schemes in Croatia and Estonia, though Hungary’s income threshold and processing timelines set it apart.

The White Card is a residence permit tailored to freelancers, entrepreneurs, and remote workers — also referred to as the Nomad Residence Permit. It was created specifically to attract skilled, internationally mobile workers and entrepreneurs from outside the EU and EEA — in other words, third-country nationals.

The main requirements and conditions associated with the White Card are:

• Applicants must demonstrate a confirmed monthly income of at least €3,000 and must be employed by or contracted with a company based outside the EU (as of 2025).
• Evidence of remote income of €3,000 or more per month and savings of at least €10,000 must be provided.
• The White Card is granted for one year and may be extended for a further year, giving a maximum continuous stay of two years.
• Comprehensive healthcare coverage is compulsory; private health insurance must be in place before applying.
• All income must be sourced from outside Hungary — working for Hungarian clients or employers on this permit is not permitted.
• From the date of document submission, the review and issuance process can take up to four months.
• As of 2024, the application fee when submitting from your country of residence is €126; renewal within Hungary costs €112. Always check the Enter Hungary portal for the most current fee schedule.

Hungarian immigration rules do not allow White Card holders to bring family members into Hungary under the White Card itself. However, family members may apply separately under other applicable visa categories — such as study, employment, or tourism — or, if a spouse also works remotely and independently meets the income threshold, they may apply on the same grounds as the primary applicant.

Digital nomads are not subject to Hungarian income tax in the ordinary course; however, anyone who spends 183 days or more in Hungary within a calendar year becomes a tax resident and will then be liable for the standard 15% flat personal income tax on their worldwide income. Time spent on the White Card does not accumulate towards permanent residency or an EU long-term residence permit.

What taxes and social contributions apply to self-employed expats and business owners in Hungary?

Hungary distinguishes itself within the EU by applying a single flat 15% rate of personal income tax rather than a progressive scale as most other member states do. This approach keeps tax compliance relatively predictable and substantially reduces the burden on higher-earning individuals, business owners, and entrepreneurs. In contrast to the PAYE arrangements common in many countries — where an employer deducts tax at source — self-employed people in Hungary are responsible for managing their own declarations and payments through NAV.

Sole traders in Hungary may choose from three main taxation frameworks:

• KATA (Itemised flat-rate tax): KATA is a fixed monthly tax available to sole traders who exclusively invoice private individuals rather than companies. Qualifying traders pay a flat HUF 50,000 per month. Income exceeding HUF 18 million attracts an additional 40% special tax on the surplus. It is important to note that KATA is heavily restricted — it cannot generally be used when raising invoices to businesses or legal entities.
• Átalányadózás (Flat-rate taxation): Under the átalányadózás regime, as of 2025, a fixed deemed-cost percentage is applied depending on the nature of the activity — for example, 60% for IT or consultancy work — and the remaining income is taxed at the 15% flat rate. A tax-free allowance also applies on income up to HUF 1,744,800. This is widely regarded as the most suitable option for consultants and service providers who work with business clients.
• Standard SZJA (Personal income tax): Under this approach, income tax of 15% applies to profit. On top of this, a dividend tax of 15% plus 13% of the already-taxed profit becomes payable, meaning the combined effective rate can reach approximately 50% of total income. This regime is generally considered the least favourable option for most sole traders.

For limited companies (Kft), the tax environment is exceptionally attractive by European standards. Companies registered in Hungary benefit from a 9% corporate income tax rate — the lowest in the EU — a 15% flat personal income tax, and a local business tax ranging from 0% to 2% depending on the municipality.

Hungary’s standard VAT rate of 27% is the highest in the EU, with reduced rates of 5% and 18% applying to specified categories including medicines, books, and accommodation. This elevated VAT rate has direct implications for pricing strategy, particularly where clients are unable to reclaim input VAT. Sole traders with annual turnover below HUF 18,000,000 may qualify for VAT exemption.

With regard to social contributions, self-employed persons who treat self-employment as their primary occupation must pay social contribution tax (SZOCHO) and health security (TB) contributions calculated on the minimum tax base each month, irrespective of whether any income has been earned. On the employer side, the contribution rate to the national budget is 13%, while the employed population contributes 18.5%. For current rates and thresholds, consult the National Tax and Customs Administration (NAV) directly.

Hungary maintains an extensive network of double taxation treaties, facilitating the tax-efficient transfer of profits to an entrepreneur’s home country. If you are tax-resident elsewhere, or your business generates cross-border income, it is essential to establish whether Hungary has a relevant treaty with your country of residence. After 183 consecutive days of residence in Hungary, nomads receive identification numbers and are treated as tax residents.

Are there any incentives, grants, or programmes to encourage expat entrepreneurs in Hungary?

Hungary has grown into an increasingly appealing destination for international entrepreneurs, not only because of its low and stable tax rates but also due to a well-defined residency pathway linked to business formation. Since March 2024, revised immigration rules under Law 2023.XC allow non-EU and non-EEA nationals to obtain a Hungarian residence permit by registering a legal entity in the country.

The most compelling incentive for foreign business owners is arguably the tax framework itself. The 15% flat personal income tax and Europe’s lowest corporate income tax rate of 9% are central pillars of Hungary’s appeal for those seeking to optimise their tax position. By comparison, corporate tax rates across many other EU member states fall in the range of 19% to 30%, making Hungary’s offering considerably more competitive.

Companies engaged in innovation and technology development can take advantage of enhanced R&D tax credits that permit up to 200% of eligible costs to be deducted from the corporate tax base, potentially reducing the corporate income tax liability to zero. This is a significant draw for technology startups and research-focused enterprises.

For companies, the KIVA regime provides a simplified alternative that replaces both corporate income tax and social contribution tax, applying a 10% rate to a specific KIVA tax base rather than taxing accounting profit in the conventional manner. This can translate into meaningful savings for smaller businesses carrying significant payroll costs.

Since March 2024, the updated immigration framework allows non-EU and non-EEA nationals to secure a Hungarian residence permit by founding a company such as a Kft. Applicants need to demonstrate a minimum monthly income of approximately €1,500 to support their residency application. The business residence permit is valid for one year and can be renewed once for a further two years. This represents a viable route for non-EU founders wishing to live in Hungary and build a locally based business without entering employment. For the latest programme conditions, refer to the Enter Hungary portal operated by the NDGAP.

Local business tax rates differ between municipalities — Budapest, for instance, currently levies no local business tax at all — which may make the capital an attractive choice for your company’s registered address. This is a worthwhile comparison to make if you are weighing up different Hungarian cities for your base of operations.

What are the practical challenges of being self-employed or running a business in Hungary?

Establishing a sole proprietorship, managing VAT obligations, and keeping pace with local compliance requirements can demand considerable time and effort — particularly if you do not speak Hungarian or simply want to get on with your work as quickly as possible. While initial registration is digital and free, the ongoing administrative workload — monthly or quarterly tax filings, social contribution payments, and annual reports — is conducted primarily in Hungarian and demands a solid familiarity with the local system.

Language barriers in bureaucracy. Every official form, tax filing, and NAV communication is in Hungarian. Unlike some EU countries where government portals offer multilingual interfaces, Hungary’s administrative infrastructure is overwhelmingly Hungarian-language. Engaging a bilingual accountant (könyvelő) or tax adviser is strongly recommended, and for company formation it is a legal necessity, since the countersignature of an attorney or notary is required on all founding documents and applications.

Banking access. Some foreign entrepreneurs encounter difficulties when opening corporate bank accounts, particularly in satisfying Know Your Customer (KYC) requirements. Having all required documentation prepared in advance will help the process proceed smoothly. A Hungarian Kft must open at least one HUF business bank account in Hungary within 8 days of registration, and this must be done in person — remote account opening is not an option. This means company founders must physically travel to Hungary at least once during the setup process.

Invoicing requirements. Hungary operates strict electronic invoicing rules. The NAV Online Invoice System (RTIR) requires that all invoices exceeding a certain VAT threshold be reported to NAV in real time. Dedicated Hungarian invoicing platforms such as Számlázz.hu or Billingo are widely used and integrate directly with the NAV system. Foreign-language documents will generally require an official Hungarian translation and often an apostille — working with an authorised translator and a specialist formation agent will help avoid costly delays.

Choosing the right tax regime. Deciding between KATA, átalányadózás, and standard SZJA has far-reaching financial consequences and is not always a clear-cut decision. In many cases, discussing your situation thoroughly with a qualified specialist is well worth the investment. If your annual earnings exceed HUF 24 million, the sole proprietorship route is closed and you will need to establish a company (Bt or Kft) — which, even so, tends to produce a lower overall tax burden than the standard SZJA self-employment route. Company formation will require the involvement of a lawyer.

Registered address requirements. Sole traders and limited companies alike must maintain a registered seat address in Hungary. Seat services are subject to strict regulation; you will need a written contract of at least one year’s duration and must undergo an identification and monitoring process required under anti-terrorism and anti-money laundering legislation. Virtual office services are readily available in Budapest, but you must confirm that any provider is officially registered.

Getting professional support. The consensus among expats who have navigated Hungarian tax and corporate law is that local professional assistance is not merely advisable — in many situations it is practically indispensable. Foreign founders frequently retain a Hungarian attorney or formation specialist to handle document translation and preparation. Factor these service costs into your planning when budgeting for your business launch.

Frequently asked questions

Can I be both employed and self-employed at the same time in Hungary?

Yes, it is possible to combine employment and self-employment status in Hungary. However, the tax treatment differs considerably between the two situations. If self-employment is your secondary activity — for instance, you are a full-time student or work more than 36 hours per week as an employee — you are not required to pay social contribution tax and social security contributions based on the minimum tax base; instead, contributions are calculated only on your actual self-employment income. Given that the rules vary according to your primary occupation status, it is advisable to clarify your specific circumstances with a Hungarian tax professional.

Can I invoice foreign clients as a self-employed person in Hungary?

In most cases, yes. Under the átalányadózás or standard SZJA regimes, you are free to invoice both Hungarian and foreign clients without restriction. Under KATA, however, you may only invoice private individuals — whether Hungarian or foreign — and not companies or other legal entities of any kind. If the majority of your work is with businesses or organisations, KATA is unlikely to be a workable option and átalányadózás is generally the recommended alternative.

What happens to my sole trader registration if my residence permit changes or expires?

Non-EU citizens may only operate a private enterprise when their residence permit falls under specific qualifying categories — “study”, “gainful activity”, “employment”, or “family reunification”. A permit granted for “other reason” does not carry the right to run a private enterprise in Hungary. If your permit lapses or shifts to a non-qualifying category, you may forfeit the right to continue trading as a sole entrepreneur. You are obliged to notify NAV immediately of any change in your legal status, and you should seek guidance from an immigration specialist to understand your available options.

Do I need to speak Hungarian to register a company or become self-employed in Hungary?

There is no formal language requirement for registration itself, but in practice all official forms, tax submissions, and communications from NAV are in Hungarian. Online platforms such as Ügyfélkapu and the NAV filing system are primarily available in Hungarian only. The great majority of foreign nationals working in Hungary engage a bilingual local accountant or legal adviser to manage their day-to-day compliance obligations. For company formation, the involvement of a Hungarian-speaking attorney is a legal requirement, as their countersignature on founding documents is mandatory.

Is there a minimum income requirement to maintain a sole trader registration in Hungary?

No minimum income level is required to keep a sole trader registration active. However, where self-employment is your primary occupation, you are required to pay social contribution tax (SZOCHO) and health security (TB) contributions based on the minimum tax base every month, even during periods when you have earned nothing. This creates a fixed monthly financial obligation that applies regardless of your income level, which is an important factor to consider if your earnings are variable or unpredictable.

Can a Kft (limited company) provide me with a Hungarian residence permit?

Since March 2024, non-EU and non-EEA nationals have been able to obtain a Hungarian residence permit by registering a Kft or comparable legal entity. It is worth noting that this route is not available via a sole proprietorship, since registering a sole enterprise itself requires an existing Hungarian residence permit. The business residence permit is issued for one year and may be renewed once for a further two years; it does not, however, provide a direct pathway to permanent residency or Hungarian citizenship.

What is the VAT threshold for self-employed people in Hungary?

As of 2025, freelancers and sole traders whose total annual revenue falls below HUF 18,000,000 may qualify for VAT exemption (alanyi adómentesség). Once this threshold is crossed, registration for VAT with NAV becomes compulsory. The standard VAT rate in Hungary is 27%, with reduced rates of 5% and 18% applying to certain goods and services such as medicines, books, and accommodation. Since thresholds are subject to change, it is worth checking the current figure with NAV before making any decisions.

What is the White Card and how does it differ from a business residence permit?

The White Card is a residence permit for freelancers, entrepreneurs, and remote workers who derive their income entirely from outside Hungary. Holders are not required to set up a Hungarian company. A business residence permit, on the other hand, requires you to formally register and actively run a Hungarian Kft, and offers the possibility of renewal beyond the two-year ceiling that applies to the White Card. The White Card stipulates that all income must originate abroad and does not provide an automatic route to permanent residency. The two options are aimed at different profiles: the White Card suits fully remote workers with no intention of operating locally, while the business residence permit is better suited to those who wish to establish a Hungarian company and build more lasting ties to the country.