Hungary's taxes at a glance
Structure used: Sole proprietor (egyeni vallalkozo) under flat-rate taxation with the 45% cost allowance at $50,000 and $100,000 of revenue; itemized entrepreneurial income tax (withdrawal at the guaranteed minimum wage, 9% on profit, 15% entrepreneurial dividend) at $250,000, above the flat-rate revenue limit; local business tax at the 2% maximum, as in Budapest. Bands are the effective tax on profit for a remote worker using this structure, with clients abroad and costs of 15% of revenue.
Hungary tax residency: permanent home, vital interests or 183 days
Section 3 of the Personal Income Tax Act sets the residence tests for foreigners. The general tests apply in order, and 2 groups have their own rule:
- Hungary is your only permanent home. A home you keep available in Hungary, with none anywhere else, makes you resident without any day count.
- Your center of vital interests is in Hungary. If you have homes in more than 1 country, the question becomes where your closest personal, family and economic ties are.
- Your habitual abode is in Hungary. If neither test settles it, the place you usually stay decides.
- EEA nationals: 183 days. A citizen of an EEA country who lives in Hungary under free movement rules for at least 183 days in a calendar year is resident.
- Long-term residence status. A non-EU national who holds long-term residence status in Hungary is resident automatically.
The test to watch is the first. Renting an apartment in Budapest and giving up your home abroad makes Hungary your only permanent home from that day, whatever the calendar says. If 2 countries both treat you as resident, the tie-breaker in the tax treaty between them decides which one taxes your worldwide income.
Staying out of Hungarian tax residence
Works
You are an Austrian citizen who spends 5 months a year in Budapest on short lets, and you keep your apartment, partner and business in Vienna, where you file as a resident. Hungary is not your only permanent home, your ties sit in Austria and you stay under 183 days, so Hungary has no claim on your worldwide income.
Fails
You give up your London apartment, sign a 12-month lease in Budapest and plan to spend the summer traveling. Hungary is now your only permanent home, so you are resident from the day you moved and owe 15% on your worldwide income from then on, however many days you end up spending abroad.
Hungary's 15% flat tax for freelancers, worked through
The personal income tax rate is 15% on nearly every kind of income, with no brackets. For a freelancer the rate is the smaller part of the bill: a sole proprietor also pays 18.5% social security and 13% social contribution tax on the same taxable income, with no upper cap on the base.
Under flat-rate taxation, the route any sole proprietor below the revenue limit of HUF 38,736,000 (about $120,000) can choose, 45% of revenue counts as costs and the first HUF 1,936,800 (about $6,000) of what remains is free of tax and contributions. The example below uses those rules plus the 2% maximum local business tax.
A flat-rate sole proprietor in 2026, with real costs of 15% of revenue (forint at the ECB rate of September 28, 2026)
| Line | $50,000 revenue | $100,000 revenue |
|---|---|---|
| Revenue in forint | HUF 16,132,000 | HUF 32,264,000 |
| Profit after 15% real costs | HUF 13,712,200 | HUF 27,424,400 |
| Flat-rate income (55% of revenue) | HUF 8,872,600 | HUF 17,745,200 |
| Taxable after the HUF 1,936,800 tax-free amount | HUF 6,935,800 | HUF 15,808,400 |
| Income tax at 15% | HUF 1,040,370 | HUF 2,371,260 |
| Social security at 18.5% | HUF 1,283,123 | HUF 2,924,554 |
| Social contribution tax at 13% | HUF 901,654 | HUF 2,055,092 |
| Local business tax at 2% | HUF 120,000 (fixed base) | HUF 645,280 |
| Total tax and contributions | HUF 3,345,147 | HUF 7,996,186 |
| Share of profit | 24.4% | 29.2% |
The 2 social charges together cost 2.1 times the income tax at both incomes. Local business tax is set by each municipality at up to 2% of net revenue, and a small business with revenue up to HUF 25 million (about $77,500) can pay it on a fixed base instead, which is why it is so small at $50,000.
At $250,000 of revenue you are over the flat-rate limit, and itemized entrepreneurial taxation, with its 9% tax on profit and 15% on the entrepreneurial dividend, brings the total to HUF 18,138,053 (about $56,200) on our numbers, or 26.5% of profit.
Foreign income and remote work once you live in Hungary
Residents are taxed on all income, whether earned in Hungary or abroad, with no newcomer regime. Where a tax treaty applies, its rules govern income earned abroad, and income that a treaty leaves to the other country is exempt in Hungary, typically except dividends. Without a treaty, Hungary cuts its tax by 90% of the foreign tax paid on the same income, up to the Hungarian tax on it.
Investment income is taxed separately at 15%: dividends, interest and securities gains. Foreign tax on a foreign dividend is deducted from the 15%, but without a treaty at least 5% stays payable in Hungary. On top comes 13% social contribution tax on dividends and similar income until your total income reaches 24 times the minimum wage, HUF 7,747,200 (about $24,000) in 2026, and dividends, interest or gains from a company in an offshore state are taxed as consolidated income instead of at the separate rate.
Work done while living in Hungary is taxed there whatever the clients' location. For a non-EU remote worker the White Card adds a limit: it goes only to people employed outside Hungary or owning a profitable company outside Hungary, and holders may not pursue gainful activity in Hungary or hold a share in a Hungarian company. That rules out the sole proprietorship in the table, so a White Card holder's foreign salary is simply taxed as a resident's income.
Filing in Hungary: the dates that matter
The tax year is the calendar year, and the annual return is due by May 20 of the next year, with any tax still owed paid by the same date. For 2026 income that is form 26SZJA.
Your first year as a sole proprietor in Hungary
- Register as a sole proprietor (egyéni vállalkozó) with the tax authority and choose flat-rate taxation when you register.
- Keep revenue records; under flat-rate taxation you do not have to document costs.
- Issue an invoice or receipt for every sale, because a tax authority fine for missing ones ends flat-rate eligibility.
- Watch revenue against HUF 38,736,000 (about $120,000) a year: pass it and you leave flat-rate taxation, and a person who leaves cannot come back for 12 months.
- Check your municipality's local business tax rate, which can be anything up to 2%, and whether the fixed-base option suits you.
- File the annual return by May 20 of the next year and pay what is still owed by the same date.
David's note
The 15% is the number people quote about Hungary, but I would budget close to 30% of profit for a flat-rate freelancer at $100,000. The social charges are not optional and have no ceiling, so they grow with every forint you earn, and I would set aside 30% of every invoice from day 1.
Ways to move to Hungary
| Route | Minimum income or investment | Permit length | Makes you tax resident | Status |
|---|---|---|---|---|
| White Card (residence permit for digital nomads) Source: oif.gov.hu, checked September 29, 2026Digital nomad visa | €3,000 (about $3,410) a month Source: oif.gov.hu, checked September 29, 2026. EUR 3,000 net a month (about $3,400) for at least 6 months before entry, kept during the stay (National Directorate-General for Aliens Policing factsheet, updated 2026-03-11) | 12 months, renewable | With enough daysNo tax break, and holders may not pursue gainful activity in Hungary or own a Hungarian company, so they work for a foreign employer or their own foreign company and are taxed as normal residents. | Open |
| Guest Investor Residence Permit Source: fragomen.com, checked September 28, 2026Golden visa | Investment of €250,000 (about $284,000) Source: fragomen.com, checked September 28, 2026. EUR 250,000 (about $284,000) in units of a Hungarian real estate investment fund, or a EUR 1,000,000 donation to a higher education institution. Reports of a EUR 500,000 residential property option conflict | 10 years, renewable | With enough daysNo tax break; holders are taxed as normal residents once resident. | Open |
Special tax regimes in Hungary
Flat-rate taxation for sole proprietors (atalanyadozas)
A sole proprietor deducts a fixed share of revenue instead of actual costs and pays 15% income tax on the rest, after a tax-free amount of half the annual minimum wage. Social security and social contribution tax are charged on the same taxable income. Only revenue records are needed.
Open to new applicants. Source: nav.gov.hu, checked September 29, 2026 A new sole proprietor chooses it when registering with NAV; an existing one elects it in the annual return filed by 20 May.
Itemized entrepreneurial income tax for sole proprietors
The sole proprietor books actual costs, pays tax and contributions on a chosen withdrawal like a salary, pays 9% on the remaining profit, and then 15% on what is left as an entrepreneurial dividend. Above the flat-rate revenue limit this is the default for a sole proprietor.
Open to new applicants. Source: nav.gov.hu, checked September 29, 2026
Fixed-rate small taxpayers' tax (KATA)
A fixed monthly tax of HUF 50,000 (about $155) that replaces income tax and contributions for small sole proprietors. Since 2022 it is limited to full-time sole proprietors selling to private individuals, so a freelancer billing businesses abroad cannot use it.
Open, with terms changed recently. Source: nav.gov.hu, checked September 29, 2026
Running your own company from Hungary
A Hungarian Kft pays 9% corporate tax, and dividends to an individual are taxed at 15%. Add up to 2% local business tax on revenue, and a Kft that pays out all of $100,000 of profit bears about 24.5%, before the 13% social contribution tax a Hungarian-insured owner also pays on dividends up to the cap.
Forming one goes through a Hungarian lawyer and the court of registration, since the law requires legal representation, and the registration itself is duty-free. The heavier cost is the minimum capital of HUF 3 million (about $9,300), which stays locked in the company.
For a resident founder the Kft rarely beats the sole proprietor. On our numbers, a Kft with the working owner's minimum contributions lands about level with itemized sole-proprietor taxation at $250,000 of revenue and costs more below it.
The reverse move has its own risk. A Kft run by a founder who lives in another country can be treated as resident, or as having a permanent establishment, in that country, and at 9% it counts as low-taxed under most EU controlled foreign company rules, so an owner living in a high-tax EU country can be taxed on its profit at home.
White Card holders cannot use a Kft at all, because the permit bars any share in a Hungarian company.
US citizens in Hungary: no treaty, but a totalization agreement
The US-Hungary income tax treaty stopped applying to taxable periods beginning on or after January 1, 2024, so Americans in Hungary rely on the foreign tax credit and the foreign earned income exclusion of $132,900 for 2026 with no treaty relief. Social security is simpler: a totalization agreement is in force, so a self-employed American pays into 1 system, and a certificate of coverage from Hungary keeps you out of US self-employment tax when the Hungarian system covers you. You still file a US return every year.
The costly mistakes in Hungary
A Budapest lease can make Hungary your only permanent home
Hungary's first residence test has no day count. Give up your home abroad and rent in Budapest, and Hungary becomes your only permanent home from that day, so you are resident and taxed at 15% on worldwide income, with social charges on self-employed income, even if you travel for half the year.
The second is outgrowing the flat-rate regime without planning for it. Revenue above HUF 38,736,000 (about $120,000) ends flat-rate taxation, and the move to itemized taxation changes both the bookkeeping you need and the bill you pay.
The third is taking the White Card and then invoicing from Hungary. The permit is for people employed by, or owning, a company outside Hungary, with no gainful activity in Hungary, so registering as a sole proprietor or buying into a Kft breaks its conditions.
Who Hungary suits, and who it does not
Good fit
- EU citizens who want a simple 15% flat income tax and can use the flat-rate regime: about 24% of profit, all taxes included, at $50,000 of revenue.
- Remote employees of foreign companies earning at least €3,000 (about $3,410) net a month, through the White Card.
- Freelancers who want light bookkeeping: flat-rate taxpayers keep only revenue records.
Poor fit
- Freelancers earning over HUF 38,736,000 (about $120,000) a year, who lose the flat-rate regime.
- Non-EU freelancers on the White Card who want a Hungarian sole proprietorship or company, which the permit does not allow.
- Investors with large foreign portfolios: foreign dividends and gains are taxed at 15% plus social contribution tax up to the cap.
Recent tax and visa changes in Hungary
Flat-rate sole proprietors deduct 45% of revenue as costs instead of 40%, and the minimum social contribution tax base for sole proprietors is the minimum wage without the 112.5% multiplier. nav.gov.hu
Minimum wage HUF 322,800 and guaranteed minimum wage HUF 373,200 a month (Government Decree 426/2025), which set the flat-rate revenue limit at HUF 38,736,000 and the tax-free amount at HUF 1,936,800. nav.gov.hu
Guest Investor Residence Permit launched: EUR 250,000 in Hungarian real estate fund units or a EUR 1,000,000 university donation, 10 years. fragomen.com
