This article provides a detailed overview of the availability and key conditions for establishing a sole proprietorship in Hungary in 2025. All information is grounded in Hungary’s current legal landscape and aligned with the most recent regulations.
Sole Proprietorship Status in Hungary: Key Features
Hungary continues to recognize the legal status of sole proprietorship, known locally as Egyéni vállalkozó (Sole Proprietor). This structure is widely used by freelancers, small traders, and service providers due to its accessibility and flexibility.
| Status Name | Registration Availability | Eligible Applicants | Main Taxation Options | Usage in Practice |
|---|---|---|---|---|
| Egyéni vállalkozó (Sole Proprietor) | Yes (2025) | Hungarian citizens, EEA nationals | Standard Tax Regime or KATA (Flat rate) | Freelancers, Small Traders, Service Providers |
Eligibility and Registration Process
The registration process is standardized and primarily accessible to Hungarian citizens and citizens of European Economic Area (EEA) countries. Establishing this status does not require creating a separate legal entity—making it ideally suited to individuals seeking direct and independent business operations.
Registration Resources
Taxation Options for Sole Proprietors in Hungary
Sole proprietors in Hungary may choose between two principal taxation regimes. Each has distinct compliance requirements and financial implications, which are especially relevant for those evaluating Hungary as a possible business location in 2025.
| Taxation Method | Summary Description | Rates & Contributions (HUF) | Rates & Contributions (USD)* |
|---|---|---|---|
| KATA (Flat-Rate Regime) | Flat monthly tax; replaces most income, social, and business taxes for qualifying activities. | HUF 50,000 or HUF 75,000/month | $140 or $210/month (rate: 1 USD ≈ 355 HUF) |
| Standard Personal Income Tax | Regular tax regime with income tax and social contributions. | 15% income tax, mandatory social security contributions | 15% income tax, additional social contributions (calculated on HUF base) |
*USD conversion based on 1 USD ≈ 355 HUF.
KATA: Simplified Small Business Tax
The KATA regime offers a streamlined tax with fixed monthly payments—typically HUF 50,000 or HUF 75,000 ($140 or $210) depending on income level and activity. This significantly reduces the complexity of compliance, as it replaces most other taxes for eligible activities. It remains highly popular among freelancers and those with lower total turnover.
Personal Income Tax (Standard Regime)
The standard scheme subjects the sole proprietor’s income to a 15% personal income tax plus the usual social security contributions. This option is typically selected by those exceeding the KATA thresholds or those whose income is derived from activities not permitted under the simplified regime.
Business Use Cases and Practical Considerations
In practice, sole proprietorship in Hungary is most commonly utilized by:
- Freelancers operating across multiple clients
- Small trade professionals and consultants
- Service providers engaging in independent commercial activity
Establishing this status allows individuals to invoice clients in their own name and manage tax obligations without the administrative complexity of forming a company.
Summary Table: Key Features at a Glance
| Aspect | Detail |
|---|---|
| Status Name | Egyéni vállalkozó |
| Available in 2025 | Yes |
| Eligible Applicants | Hungarian citizens, EEA nationals |
| Registration Procedure | Straightforward and fully standardized process |
| Main Taxation Regimes | KATA (flat fee), Personal Income Tax (15%) |
Pro Tips: Optimizing Sole Proprietorship Setup in Hungary (2025)
- Assess KATA Eligibility Early: Check if your planned business activity and expected turnover qualify for KATA to take advantage of Hungary’s simplest tax compliance regime.
- Monitor Turnover Limits: Exceeding thresholds under KATA moves you to standard taxation, so always track annual income closely.
- Review Social Security Options: Under the standard regime, social security contributions can be substantial—calculate total impact before choosing your taxation path.
- Utilize Official Platforms for Registration: Use government portals for the most current forms and requirements; avoid unofficial intermediaries for compliance-sensitive procedures.
- Keep Documentation Updated: Maintain accurate invoicing and record-keeping to support tax filings and potential audits under any regime.
Official Sources of Reference
- Hungarian General Registry Office
- Hungarian Tax Authority (NAV)
- NAV – KATA Overview
- Enter Hungary – Government Portal
In summary, Hungary’s sole proprietorship status (Egyéni vállalkozó) remains active and highly accessible for both residents and EEA nationals. The streamlined registration, flexible taxation choices—particularly the flat-rate KATA regime—and broad applicability for professional activities make Hungary an attractive option for solo business operations in 2025. When evaluating tax implications and compliance, carefully review eligibility for simplified regimes and ensure all official requirements are satisfied for ongoing operations.