Self-Employed Tax in Hungary

What framework governs self-employed taxation in Hungary?

Hungarian self-employed individuals register as Egyeni Vallalkozo (EV — sole proprietors) with the Nemzeti Ado- es Vamhivatal (NAV), Hungary's National Tax and Customs Administration. Three mutually exclusive tax regimes are available under Act CXVII of 1995 on Personal Income Tax (SZJA): the standard itemised-cost method, the simplified flat-rate scheme (atalanyadozas), and the fixed-tax KATA regime. Every EV must also assess obligations under the ÁFA (general turnover tax, i.e. VAT) system and the social-insurance contribution rules administered by NAV. The choice of regime must be made at registration or at the start of each tax year; switching mid-year triggers a return to the standard method for the remainder of that year. Hungary country overview

How does the standard itemised-cost method work?

Under the standard EV method, taxable business income equals gross revenue minus documented deductible expenses, calculated under SZJA Act provisions. The resulting entrepreneurial profit is subject to a 9% entrepreneur personal income tax (vallalkozoi szemelyijovedelemado) — a corporate-style calculation distinct from the standard 15% SZJA rate that applies to employment income. Any remaining profit withdrawn as a dividend (vallalkozoi osztalek-alap) is then taxed at 15% personal income tax plus 13% social contribution tax (szocho), subject to an annual szocho ceiling. On top of income taxes, active EV participants pay 18.5% social security contributions (TB: pension 10%, health insurance 7%, labour-market 1.5%) calculated on the higher of actual income or the statutory minimum wage base of HUF 322,800 per month in 2026. The standard method suits entrepreneurs with high, documented input costs — trades, manufacturing, or capital-intensive services — where actual expenses exceed any deemed-ratio alternative. [1]

What is the atalanyadozas flat-rate regime?

Atalanyadozas (flat-rate, or lump-sum, taxation) allows eligible EVs to substitute a statutory deemed-expense ratio for actual expense records. Under SZJA Act Sections 50-57, the regime is available to EV entrepreneurs whose annual revenue does not exceed HUF 38,736,000 (ten times the annual minimum wage in 2026) for general activities, or HUF 193,680,000 (fifty times) for registered retail traders. Three deemed-expense tiers apply depending on the activity generating revenue: 40% for most general trade and service activities (meaning 60% of revenue counts as taxable income); 80% for specifically enumerated higher-cost activities such as certain construction trades, repair services, catering, and hairdressing (20% taxable); and 90% for retail sales and postal delivery activities (10% taxable). A key incentive is the annual tax-free band: the portion of flat-rate income that does not exceed half the annual minimum wage — HUF 1,936,800 in 2026 — is entirely exempt from personal income tax. Tax on the remaining taxable income is 15% SZJA plus 18.5% social security contributions plus 13% szocho. Atalanyadozas became the principal alternative for former KATA users after the 2022 reform. [1][2]

How does the KATA regime work after the September 2022 reform?

KISADOZO vallalkozok teteles adoja (KATA) was fundamentally restructured by Act XIII of 2022, effective 1 September 2022. Under the current rules, KATA is available exclusively to sole proprietors (it cannot be used through any corporate form) whose entire revenue derives from natural persons (private individuals). Invoicing any Hungarian legal entity or registered business, even for one forint, disqualifies the entrepreneur from KATA immediately. The only statutory exception covers licensed taxi and passenger transport operators. An eligible KATA payer remits HUF 50,000 per month to NAV by the 12th of each calendar month; this single payment covers personal income tax, social security contributions, vocational training levy, and healthcare entitlements. Annual revenue must not exceed HUF 18,000,000; any revenue above that cap is taxed at an additional 40% surcharge on the excess. Local business tax (iparuzesi ado) of up to 2%, levied by municipalities, applies on top of KATA and is not included in the HUF 50,000 payment. Maximum one KATA payer per household (spouses cannot both use KATA simultaneously). [2]

What VAT (AFA) obligations apply?

Hungary's standard ÁFA (Altalanos forgalmi ado) rate is 27% — the highest standard VAT rate in the European Union — applied under Act CXXVII of 2007. Reduced rates of 18% apply to certain food items and hospitality services; a 5% super-reduced rate covers essential foods, books, medicines, and district heating. From 1 January 2026, the small-enterprise VAT exemption (alanyi adomentesseg) threshold was raised from HUF 18,000,000 to HUF 20,000,000 of annual revenue; further increases to HUF 22,000,000 in 2027 and HUF 24,000,000 in 2028 are legislated. An EV below the threshold may elect exemption, meaning no VAT is charged to customers and no input VAT is recoverable. Voluntary VAT registration below the threshold is possible and advantageous for EVs with significant VAT-bearing inputs or VAT-registered business customers. KATA payers are still subject to AFA rules if they exceed the exemption threshold. Since June 2021, all EV invoices above HUF 100,000 must be submitted electronically in real time to NAV's Online Szamla (Online Invoice) platform. [3][4]

Summary comparison: three regimes at a glance

The comparative tax burden across regimes varies materially by income level. A consumer-facing service provider generating HUF 10m annually may pay an effective combined rate under 15% using KATA, while a B2B software consultant at the same revenue under the standard method may face 35-42% once all contributions are included. Regime selection is a material financial decision warranting review by a qualified tax professional familiar with Hungarian law.

For cross-border workers and inbound expats, Hungary's expat tax residency crossover covers the 183-day residence test, double tax agreement provisions, and the NAV registration procedure for foreign nationals starting self-employment in Hungary.