How to Register a Sole Proprietorship (Egyéni Vállalkozás) in Hungary

Hungary is one of the most freelancer-friendly countries in Europe, thanks to its simplified flat-rate tax regime (KATA) and its fully online registration process. This combination makes setting up as a sole proprietor fast, predictable, and attractive. Self-employment offers flexibility and independence, though entrepreneurs must carefully weigh income thresholds, liability risks, and post-registration obligations. With the right preparation, becoming a sole proprietor in Hungary can be one of the most straightforward ways to start working for yourself.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Hungary?

In Hungary, a sole proprietorship is officially called an “egyéni vállalkozás”. It’s sometimes also referred to as a sole trader, self-employed worker, or independent contractor. All these terms describe the same setup: one person legally running a business without forming a separate company.

How does a sole proprietorship (egyéni vállalkozás) work in Hungary?

Sole proprietorship vs. other business structures in Hungary

Limited company (Kft.) is a common alternative. Hungary has one of the lowest corporate tax rates in the EU, which makes the Kft. structure attractive for larger businesses. Here’s how the two compare:

Step-by-step guide: How to register a sole proprietorship in Hungary

Step 1: Check if you are eligible to become an egyéni vállalkozás

You must be at least 18 years old. Hungarian citizens, EEA citizens, and Hungarian residents can register directly. Third-country nationals (non-EEA citizens) can also register if they hold a valid residence permit that allows them to work as self-employed individuals. You must also not be barred from business activity due to criminal convictions.

Step 2: Choose your business name

By default, you can operate under your own name, but you must append “e.v.” to it (e.g., Anna Kovács e.v.). You may also register a trade name for your business activity, but the “e.v.” suffix must always remain part of the registered name.

Step 3: Gather required documents

Prepare the following:

• Valid photo ID, such as a passport or a Hungarian ID card
• Official address card (lakcímkártya), issued by the Hungarian authorities to both citizens and foreign residents with a valid residence permit
• Tax number (adószám)
• Certificate or license, if your chosen activity is regulated (e.g., healthcare, legal, financial services)
• Activity code (ÖVTJ/TEÁOR), the official code for the type of business activity you’ll carry out

Step 4: Register with NAV via Client Gate

Register your sole proprietorship by submitting a notice of commencement of business through the Client Gate (Ügyfélkapu) online portal or in person. There is no fee. Once processed, you’ll receive a certificate confirming your registration, which includes your tax number, registration number, and activity information.

Step 5: Pay registration fees and contributions

There’s generally no registration fee. Your main choice is which tax regime to choose: a fixed monthly flat-rate tax or enter the standard system. The flat rate is HUF 50,000/month (or HUF 75,000 for higher coverage), while the standard system involves calculating income tax and contributions separately.

Step 6: Complete post-registration obligations

You must issue invoices with electronic reporting to NAV, maintain records, and pay local business tax. Any changes to your activity must be updated through NAV.

Financial and tax obligations for sole proprietors in Hungary

You are responsible for:

• Flat-rate system (KATA): If you choose this option, you pay a fixed monthly amount of HUF 50,000 (or HUF 75,000 for higher coverage). This covers income tax, pension, and health contributions. The only extras are local business tax (up to 2% depending on municipality) and VAT if annual revenue exceeds HUF 12 million. If you earn more than HUF 18 million, a 40% tax applies to the excess.
• Standard system: Under the regular rules, you pay 15% personal income tax on profits, plus 18.5% social security contribution and 13% social contribution tax. In addition, municipalities charge a local business tax of up to 2%, and VAT registration is required if your annual revenue exceeds HUF 18 million.
• VAT: The standard VAT rate is 27%, with reduced rates of 18% and 5% for certain goods and services. Sole proprietors must register for VAT if annual revenue exceeds HUF 18 million, as confirmed by the NAV
• Record-keeping: KATA requires minimal bookkeeping since taxes are fixed. Under the standard system, you must keep detailed accounts of income and expenses, issue invoices that meet NAV requirements, and retain all documents in case of an audit.

Launch your contracting career and stay compliant with Deel

Registering a sole proprietorship gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
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• Keep accurate records for tax season
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• Spend your earnings in USD with the Deel Card
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• Enjoy contractor perks from 150+ partners

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FAQs

What is the minimum capital required to start an egyéni vállalkozás in Hungary?
None.

Do sole proprietors need to register for VAT?
Not if annual income is below HUF 18 million. Above that, VAT registration is mandatory.

How much are the standard monthly or annual contributions?
Flat-rate tax is HUF 50,000/month (or HUF 75,000 for higher coverage). Under the standard system, contributions are calculated as a percentage of income.

Can an egyéni vállalkozás hire employees?
Yes, but you’ll take on employer obligations such as payroll reporting and social contributions.

How long does it take to register?
You can begin operating the same day you submit your notice via Client Gate.

Can foreign nationals register?

Yes. EEA citizens and Hungarian residents can register. Non-EEA nationals may also register if they hold a relevant residence permit.

Do sole proprietors need a separate business bank account?
Not mandatory, but recommended for clarity — especially if VAT-registered.

What happens if I stop working?
You must notify NAV and the Chamber of Commerce using the Web Assistant or in person.

Are there government incentives?
No specific incentives, though the flat-rate system itself is designed as a simplified option.

Can I use Deel as a sole proprietor in Hungary?
Yes. Deel supports payments, invoicing, and contract compliance for freelancers worldwide.