As a general rule, only and exclusively self-employed persons, i.e. not companies in corporate form, e.g. Bt., Kft. In addition, even as individuals, flat-rate taxation is not an option. In any case, it is necessary that the entrepreneur is registered as a sole entrepreneur and has a tax number established by the tax authority - NTAC (NAV).

Yes. If the entrepreneur does not opt for flat-rate taxation during the year, but for the entire tax year, the income for the previous year may not exceed ten times the previous year's minimum wage (27 840 000 HUF), or 50 times the previous year's minimum wage (139 200 000 HUF) for entrepreneurs engaged solely and exclusively in retail trade.

In addition, for the current tax year, if the entrepreneur does not start the activity during the year, the income may not exceed 32 016 000 HUF, or 160 080 000 HUF for entrepreneurs who only and exclusively carry out retail trade activities.

Amennyiben év közben kezdi meg a vállalkozó az adóköteles tevékenységet, úgy a felső limiteket időarányosan kell figyelembe venni. Pl. 2024. 04. 01-jén indult vállalkozás esetén ez azt jelenti, hogy az évben csupán 275 napot lehet maximum aktív a vállalkozása, ezért a korlát az alábbiak szerint alakul: 32 016 000/ 365 x 275 = 24 121 643 Ft. 

In contrast to the KATA, in flat-rate taxation the entrepreneur does not pay an itemised tax, so he is not exempt from paying personal income tax (szja), social security contributions (tb) and social contribution tax (szocho).

In order to calculate taxes, we need to establish the value of the entrepreneur's income. As a general rule, the income is the amount received by the entrepreneur after the sale of goods or the provision of services, which can be supported by an invoice. Therefore, it is not the date of issue of the invoice that is relevant, but the date on which the invoice was paid (e.g. the invoice was credited to a bank account, cash was received).

On the basis of the activity carried out, the entrepreneur must determine the so-called cost rate to be applied. Under the logic of flat-rate taxation, there is no need for itemised cost accounting, and cost accounts do not need to be collected by default. Instead of itemised cost accounting, the law defines three types of cost rates to be used to determine income. These cost rates are as follows:

The cost rate is not based on the declared activity, but on the activity from which the self-employed person derived income. This can be established on the basis of the invoice issued by the entrepreneur.

Once the applicable cost ratio has been successfully determined, the income is easy to calculate. For example, for an activity that qualifies for a 40% expense ratio, assuming an income of 5 000 000 HUF, the income is calculated as follows:

Revenue: 5 000 000 HUF
Cost ratio (40%): 5 000 000 x 40% = 2 000 000 HUF
Income (tax base): 5 000 000 - 2 000 000 = 3 000 000 HUF

Within this tax form, there is a so-called personal income tax free threshold. This is not included in the above derivation.

The part of a self-employed person's flat-rate income from their activity that does not exceed half of the annual minimum wage is exempt from tax. Translated into figures, 1 600 800 HUF of the income is tax-free (this corresponds to revenue of 2 668 000 HUF, since if we take HUF 2 668 000 as the basis of revenue and apply the 40% cost ratio, we get 1 600 800 HUF as income).

Continuing the above example - if the entrepreneur's annual income is 5 000 000 HUF, then 2 668 000 HUF of that will be tax-free, i.e. the income as a tax base will be reduced by 1 600 800 HUF, so that only 1 399 200 HUF will be taxable.

An insured person (employed or self-employed) is a self-employed person who:

1. is not simultaneously employed for at least 36 hours per week,
2. is not pursuing studies,
3. a self-employed person who is also insured as a partner is, as a general rule, considered to be self-employed as a principal activity (in which case the contribution liability of the partner is based on the contributionable income actually earned), and,
4. if you are not employed by another employer at the same time, but, for example, on a contract basis.

However, if any of the above is true, you are considered to be a self-employed person in a second job (side job).

A retired entrepreneur is a self-employed person carrying out a so-called complementary activity. A self-employed person who is engaged in an ancillary activity is a self-employed person who:

1. is self-employed as a pensioner in his or her own right, and

2. a person in receipt of a widow's pension who has reached the retirement age applicable to him or her (hereinafter referred to as "pensioner").

By default, a full-time self-employed person has the highest tax burden. A full-time entrepreneur, if his/her income is below the monthly minimum wage (HUF 266 800 HUF in 2024) or the guaranteed minimum wage (HUF 300 150 in 2024), is liable to pay the so-called minimum contributions. The minimum contributions are calculated as follows:

If the entrepreneur is considered to be a part-timer sole entrepreneur, they are exempt from the minimum contribution obligation, so the value of the contributions must be determined on the basis of the monthly income.

If the entrepreneur is engaged in an ancillary activity - i.e. is retired - no contribution liability arises.

This can be easily checked in the Chamber of Commerce's Entrepreneurship Information System, which can be accessed on the Chamber of Commerce and Industry website.

It is a good idea to enter the ÖVTJ code of the main activity in the search term field, so that the first result will show information related to the activity, including the qualification requirements.

For contributions (social security contribution and social contribution tax), the deadline for submitting contribution retruns is the 12th day of the month following each calendar quarter. Contributions must be paid by the 12th day of the month following the quarter in question, based on income determined at the same time. For both contributions and personal income tax, you will receive an automatic message informing you of the amount you need to pay and the information you need to send.

1st quarter (January, February, March 2024) - 12 April 2024

2nd quarter (April, May, June 2024) - 12 July 2024

3rd quarter (July, August, September 2024) - 12 October 2024

4td quarter (October, November, December 2024) - 12 January 2025

A self-employed person working full-time is not obliged to pay social security contributions for the lower limit of the contribution threshold for the period during which

• receive an infant care allowance, adoption allowance or childcare allowance,
• receives childcare allowance, child-raising allowance, childcare allowance or care allowance, unless he/she is self-employed during the period for which childcare allowance, childcare allowance or care allowance is paid, or receives at the same time an infant care allowance, adoption allowance, childcare allowance or childcare allowance,
• is in receipt of an infant care allowance, adoption allowance, childcare allowance or childcare benefit at the same time,
• a volunteer soldier in the military reserve,
• detainee,
• as a lawyer, patent attorney, notary public, he/she ceases to be a member of a chamber and self-employed.

If these circumstances do not apply for the whole calendar month, the minimum contribution threshold is calculated on the basis of one thirtieth of the contribution base per calendar day. This practice should also apply if the enterprise started or ceased during the year.

In the case of contributions, a quarterly return must be made and sent to the tax authorities. The due date for this is the 12th day of the month following the quarter in question, in accordance with the payment. Technically, this is known as a Return 58. 

If you subscribe to our service, we'll do it for you.
However, there is no obligation to file a quarterly personal income tax return, because you only have to prepare and submit a return to the tax authorities once a year, by 20 May of the year following the year in question.

That's right, a self-employed person who is a flat-rate taxpayer is also subject to local business tax (HIPA). In flat-rate taxation, the HIPA base is the amount of income determined in the flat-rate tax plus 20%, with a maximum of 80% of income. Thus, continuing the example above, the business tax is as follows:

• Revenue: 5 000 000 HUF
• Cost rate (40%): 2 000 000 HUF
• Income: 3 000 000 HUF
• HIPA base: 3 000 000 * 1.2 = 3 600 000 HUF
• Upper limit: 5 000 000 * 0.8 = 4 000 000 HUF
• HIPA (1%): 3 600 000 * 1% = 36 000 HUF

HIPA is payable in two instalments by 15 March and 15 September.

It is important to note that an individual entrepreneur who leaves the KATA and opts for flat-rate taxation is subject to a reporting obligation in respect of the above simplified tax base definition. If this is not done, the tax rate will be determined according to the general rules.

According to this, the taxable amount is the revenue less the purchase value of the goods sold and the value of the services rendered, the cost of materials, the value of subcontracted services, and the direct costs of basic research, applied research and experimental development charged in the tax year.

The deadline for submitting business tax returns is 31 May of the year following the year in question.

If the entrepreneur is unable to work and his/her insurance is in order, he/she is entitled to sick pay. The self-employed person can submit his/her claim for sickness benefit using the form "Application for sickness benefit, infant care allowance, childcare allowance, adoption allowance, accident allowance". As with employees, there is no paper-based administration or submission, and claims can only be submitted electronically.

The completed application form with the annexes must be submitted to the competent health insurance fund office of the capital and county government office of the seat of the individual enterprise, or in the case of the seat of Budapest or Pest county to the Government Office of the Budapest Capital.

If the self-employed person has not previously registered with the competent office, they must do so. For more information click here..

It is important to note that a self-employed person working full-time is not obliged to pay social security contributions for the period during which he/she receives sick pay or accident sick pay.

Yes, as with sick pay, a self-employed person is not obliged to pay social security contributions for the lower limit of the contribution threshold for the period during which

• receive an infant care allowance, adoption allowance or childcare allowance,
• receives childcare allowance, child-raising allowance, childcare allowance or care allowance, unless he/she is self-employed during the period for which childcare allowance, childcare allowance or care allowance is paid, or receives at the same time an infant care allowance, adoption allowance, childcare allowance or childcare allowance,
• a volunteer soldier in the military reserve,
• detainee,
• as a lawyer, patent attorney, notary public, he/she ceases to be a member of a chamber and self-employed.

Yes, there are more. These allowances are primarily regulated by the social tax law, so you can claim benefits related to the tax base of the social tax. It is important to note that the legislation sets out a specific order in which the allowances can be claimed. The following allowances are available:

1. allowance for mothers raising four or more children (NÉTÁK)
2. Allowance for young people under the age of 25
3. Allowance for mothers under the age of 30
4. personal allowance
5. newlywed allowance
6. family allowance

The beneficiary may claim the allowance without any limit on the income on which the allowance is based in each month of entitlement. The allowance can be claimed during the year, when the advance tax is calculated, or at the end of the year, when the tax return is filed.
The beneficiary is a woman who, as the natural or adoptive parent of a child she is bringing up

• you are entitled to family allowances, or
• you are no longer entitled to family allowances but have been entitled to them for at least 12 years,
• entitlement to family allowance has ceased because of the death of the child,
• and the number of children mentioned in the above points reaches four.

NÉTAK is available for the months during which you are eligible. The entitlement is for a whole month, i.e. if a woman is a NÉTAK mother for even one day in a given month, she can claim the allowance for the whole month. The entitlement opens on the first day of the month in which the mother is first considered to be a NEK mother. The entitlement will cease on the last day of the month in which the mother is last considered to be a NÉTAK mother. If the entitlement does not last for the whole tax year, the benefit is only available for income earned in respect of the months of entitlement.

As of 1 January 2023, a young person under the age of 25 can reduce his or her total taxable amount by the allowance for young people under 25.

Young people who qualify for the allowance do not have to pay personal income tax up to the monthly amount of the allowance during the period of eligibility. In the case of flat-rate taxation, the basis for the allowance is the income determined in the flat-rate. The allowance is only available on income earned in the month of entitlement. If an individual ceases to be eligible during the year and has not been able to claim the full amount of the allowance on the income earned in the months of eligibility, he/she will not be able to claim the remainder on the income earned in the other months.

The maximum amount of the allowance per tax year is the product of the number of months of entitlement multiplied by the average gross earnings of full-time employees at the national economy level for the month of July of the year preceding the tax year in question, as published by the Central Statistical Office. The monthly amount of the benefit in 2023 is 499 952 HUF, which may reduce the tax payable by 74 933 HUF.

If the entitlement is maintained for the entire tax year, the amount of the reduction of the tax base is 5 999 424 HUF which is 899 916 HUF in tax terms. The months taken into account as months of entitlement are those in which the young person has not reached the age of 25, the last month being the month in which the young person reached the age of 25.

As of 1 January 2023, the allowance can be claimed by a mother under the age of 30 after NÉTAK and the allowance for young people, before the personal allowance, the newlywed allowance and the family allowance, even during the year when determining the advance tax.

Mothers over 25 and under 30 who is eligible for claiming family allowance

• with regard to the biological or adopted child according to Section 29/A(3)(a) of the Personal Income Tax Act, or
• with regard to the fetus according to Section 29/A(3)(b)

A mother under the age of 30 is a woman who has a child and whose eligibility for family allowances in respect of her unborn child, a child born to her by blood or an adopted child starts on the day before she reaches the age of 30.

A mother under the age of 30 is entitled to the family allowance if she becomes entitled to it after 31 December 2022 in respect of her biological or adopted child or unborn child.

Those mothers over the age of 25 and under the age of 30 can also claim the allowance from 1 January 2023 who became eligible for family allowances before 2023. .

The eligibility may start if after 31 December 2022

• her pregnancy reaches day 91,
• she gives birth to a child,
• she adopts a child.

In 2023, mothers under the age of 30 are eligible for the allowance, if, for example:

• their pregnancy reaches the 91st day on 8 February, or
• they give birth to her second child on 15 March, or
• they adopt the child of their husband on 6 August,
  in all three cases, they are over 25 years old and will turn 30 after these events at the earliest.
  tölti be a 30. életévét.

In 2023, mothers are not eligible for the allowance, if, for example:

• they give birth at the age of 23,
• they raise a 2-year-old and a 4-year-old child,
• their pregnancy reached the 91st day in March 2022 and gave birth to their child in December 2022.

The amount of allowance for mothers under the age of 30 per month is up to the amount of the average gross earnings of full-time employees at the national economy level for the month of July of the year preceding the year in question, as officially published by the Hungarian Central Statistical Office. This is 499 952 HUF per month of eligibility in 2023, which means tax savings amounting to 74 993 HUF.

If the eligibility exists for the whole tax year, then the 2023 tax base can be reduced by a maximum of 5 999 424 HUF with the allowance, which means 899 914 HUF in taxes

From 1 January 2021, the personal allowance can be claimed as a tax base reduction allowance, even during the year, when the advance tax is calculated. The amount of the discount is equal to one third of the minimum wage rounded up to 100 HUF per month of entitlement, it means 77 300 HUF in 2023. 

If the eligibility exists for the whole tax year, then the consolidated tax base can be reduced by 927 600 HUF in the whole year. It means 139 140 HUF in taxes.

A severely disabled person is a person who

• suffers from one of the diseases listed in Government Decree No. 335/2009. (XII. 29.) concerning diseases that constitute severe disability, and
• receives disability pension or
• disability allowance.

The personal allowance can be claimed on the basis of a medical certificate of severe disability or a decision on entitlement to an invalidity pension or disability allowance. The medical certificate or decision does not have to be attached when filing the advance tax return, but the certificate must be retained within the limitation period. A person who receives a disability allowance or invalidity allowance may claim the personal allowance without a medical certificate.

The certification of the benefit is provided for in Decree 49/2009 (XII. 29.) of the Ministry of Health on the classification and certification of severe disability. The benefit is available for the months concerned by the disability. The starting date of the disability is stated in the medical certificate. The first month in which the personal allowance may be taken into account is the month in which the disability starts. If the disability is temporary, the last month in which the personal allowance may be taken into account is the month in which the disability ceases.

If the individual is in receipt of an invalidity pension or disability allowance, the benefit is payable for each month in which the pension or allowance is paid. Entitlement to the benefit can be proved by a benefit decision.

To qualify for the first-married couples' allowance, at least one of the couple must be married for the first time. This means that a member of the couple who is not married for the first time is also entitled to claim and share this benefit.

There is no age limit to qualify for the discount. The provisions applicable to spouses also apply to registered partners, and therefore the term spouse is also used to include registered partners.

The amount of the newlywed allowance that can be claimed jointly by spouses is 33 335 HUF per month of eligibility, which means that the amount of tax they have to pay is reduced by 5 000 HUF.

The entitlement month is the 24 months following the month of the marriage during the cohabitation period. This means that a couple who married on 3 January 2021 can claim the benefit from February 2021 until the end of January 2023. As the benefit can only be claimed during the marriage, it will cease to apply within the 24-month period if the couple divorces or one of the partners dies.

From 2022, if both members of the couple entitled to the first-married couples' allowance are under 25, the first month in which the first-married couples' allowance is applied will be the month preceding the month in which one of the spouses reaches the age of 25.s

If the marriage of young people under 25 took place before December 2021 and the young people are already claiming the first-married couples' allowance, it will be suspended from 1 January 2022. In this case, for the remaining months of eligibility from the first spouses' benefit period, the benefit will be available from the month following the month in which one of the spouses reaches the age of 25.

The newlywed allowance is claimed jointly by the spouses. This can be done by splitting the 33 335 HUF between them, or by one of them taking the allowance. When claiming jointly, the couple pays HUF 5,000 less tax per month. The joint claiming of the allowance in the tax return is independent of the spouse who was taken into account in the assessment of the advance tax. To qualify, spouses must make a joint declaration in their tax return.

To qualify, spouses must make a joint declaration in their tax return, including each other's tax identification number, stating their decision to share the amount of the benefit.

The family allowance is a tax credit that reduces the tax base and can be claimed by the beneficiary on behalf of the so-called dependent dependants, depending on the number of dependants per month of entitlement. You may be eligible for the family allowance:

• an individual who is entitled to a family allowance for a child under Act LXXXIV of 1998 on Family Support (Cst.), and the spouse of a person who is not entitled to a family allowance (for example, the spouse of a foster parent) living in the same household as the beneficiary;
• from the 91st day of pregnancy, the mother and her spouse living in the same household (i.e. not the partner);
• one of the child (person) entitled to family allowances in his/her own right or, at their discretion, his/her dependants living in the same household (including the child's parents);
• an individual in receipt of an invalidity pension or, at their discretion, one of their dependants living in the same household (including the child's parents).

In the case of the last two points, not only is the relative living in the same household eligible for the family allowance but also the relative of the child’s parents. For example, an orphaned child who is eligible for the child benefit in his/her own right is often taken into the family or household by the brother or sister of the deceased parent. In this case, the aunt or uncle cannot be considered as the relative of the child pursuant to the Civil Code18, but due to the rule, the brother or sister of the parent can also be eligible as they are considered as relatives in respect of the parent.

The family allowance is not conditional on the payment of the child benefit, so individuals who are entitled to this benefit in respect of their child but do not request or have not requested the payment of the child benefit can also claim the allowance. If the individual has not requested the payment of the child benefit and is not sure if he/she is eligible for the child benefit, he/she can get information about this from the government office in the capital or county where he/she lives.

In the case of the last two points, not only is the relative living in the same household eligible for the family allowance but also the relative of the child’s parents. For example, an orphaned child who is eligible for the child benefit in his/her own right is often taken into the family or household by the brother or sister of the deceased parent. In this case, the aunt or uncle cannot be considered as the relative of the child pursuant to the Civil Code18, but due to the rule, the brother or sister of the parent can also be eligible as they are considered as relatives in respect of the parent.

The amount of the family allowance is determined by the number of dependents and beneficiary sependents. The Personal Income Tax Act defines the concept of dependents and beneficiary dependents as follows:

• the person for whom the individual is entitled to a family allowance under the Family Law,
• the foetus during pregnancy (from the 91st day of conception until birth),
• a person who is entitled to family allowances in their own right,
• an individual receiving an invalidity pension.

You are considered a dependent under the law:

• the beneficiary is dependent,
• a person who, according to the Family Law, is or would be taken into account for the purpose of determining the amount of family allowance, even if no family allowance is granted for the beneficiary dependent, no family allowance is granted or the amount of family allowance is not affected by the number of children.

According to the Family Law, a person may be taken into account in the calculation of the family allowance if

• a pupil in an educational establishment, or
• a student enrolled in a higher education institution for the first time in a higher vocational education and training, the first bachelor's degree, the first master's degree or the first single, non-university course,
• and have no regular income.

These people are considered as dependents in terms of family allowance.

These persons are considered dependants for the purposes of the family allowance. A child pursuing studies at a public education or higher education establishment as defined above is also considered a dependant if, in respect of the dependant beneficiary

• you are not entitled to a family allowance because, for example, you receive an invalidity allowance;
• no family allowances, for example for the unborn child;
• the amount of the family allowance is not affected by the number of children, for example in the case of a child who is permanently ill and receives an increased family allowance.

A child who, with the consent of the parent or at the request of the parent, receives temporary care under Act XXXI of 1997 on the Protection of Children and Guardianship Administration (Act XXXI of 1997 on the Protection of Children and Guardianship Administration) shall also be considered a child raised in his or her own household. As described above, a child placed in temporary care may also be eligible for the family allowance. The family allowance may be claimed for the months during which the entitlement lasts for at least one day. The month of entitlement is considered to be the month,

The family allowance can be claimed for those months in which the eligibility exists for at least one day. A month can be considered to be a month of eligibility,

• in which entitlement to family allowances is established,
• for which an invalidity pension is paid,
• in which the pregnancy reaches the 91st day, as certified by a doctor, except in the month in which entitlement to family allowances for the child born is opened.

The family allowance is only available to the beneficiary for the months that count as an entitlement month. If the individual also claims the benefit for months that are no longer considered to be an eligible month, this is considered as an ineligible claim. The monthly amount of family allowance that can be claimed for the beneficiary's dependants:

A kedvezményezett eltartottak után érvényesíthető családi kedvezmény havi összege:

• 66 670 HUF for 1 dependent;
• 133 330 HUF for 2 dependants;
• 220 000 HUF for 3 (and any additional) dependants.

Examples of the amounts of discounts that can be claimed:

Overall, it can be seen that there are a number of reliefs available under the personal income tax system, but all of them require a declaration. The model declarations can be downloaded from the NAV website..

In view of the large number and order of the discounts applicable to income tax, the unused amount of the discount may be carried forward in the case of the family discount. If the amount of the family allowance to which the beneficiary is entitled is more than the amount of his/her taxable income, he/she may claim 15 per cent of the excess taxable income as a family allowance, as follows.
The family tax credit is available to individuals who

• entitled to family allowance under the Income Tax Act and
• are insured under the Social Insurance Code.

No family contribution allowance can be claimed for tax-free income that is subject to contributions. The family tax credit reduces the amount of the 18.5% social security contribution payable by the insured person. The difference between the minimum contribution threshold and the amount of the social security contribution payable on the basis of the income actually paid out is not eligible for a family contribution credit.

It is important to note that the entitlement of the insured person to social security benefits and the amount of the benefits are not affected by the application of the family contribution allowance.

Yes, there are additional discounts for social contributions. A self-employed person is entitled to a reduction on the tax he pays on his own income,

• if his/her health status is 60% or less according to a complex assessment by the rehabilitation authority, or
• on 31 December 2011, you were entitled to a Group I, II or III invalidity pension, an accidental invalidity pension and are in receipt of an invalidity benefit or rehabilitation benefit.

The beneficiary can claim the benefit if he or she has a valid document proving the complex qualification or a decision certifying the payment of benefits to persons with reduced capacity for work. If the conditions for claiming the tax allowance are no longer met, the tax allowance may no longer be claimed from the month following the month in which the entitlement ceases.

A self-employed person may, as a general rule, suspend his/her activity for a minimum of one month and a maximum of three years.

The cessation of self-employment must be reported electronically to the NAV via the Web Service. A self-employed person can also notify the cessation of his/her entrepreneurial activity at the same time as he/she notifies the start of his/her activity.

The starting date of the suspension may not be earlier than the day following the date of notification. The starting date of the suspension may not be changed after the notification. At the end of the suspension, the continuation of the activity must also be notified. If, after 3 years, the self-employed person fails to notify the continuation or termination of the self-employed activity, the individual's entitlement to self-employment ceases by operation of law on the day following the expiry of 3 years after the start date of the interruption.s

On the basis of a declaration of suspension of activity, an individual does not have to file a tax return for self-employment if he or she has ceased this activity on each day of the tax year (including if they do not carry out self-employment on the basis of a commitment made before the declaration of suspension).

During the suspension, you do not have to pay the minimum social security contributions and social contribution tax, unless the activity is not interrupted for the whole month. Even for one active day, the minimum contributions (88 378 HUF / 107 988 HUF) are still payable as a full-time self-employed person. However, during the period of cessation of self-employment, insurance is interrupted, so if the individual is not insured under any other legal relationship, such as employment, or entitled to health care under any other legal title, he or she will have to pay health care contributions.

For this reason, the self-employed person - as an insured person - must notify the competent NAV office electronically of the termination of his/her insurance relationship and the duration of the interruption of insurance by providing his/her tax identification number and registered office. The notification must be made using form 22T1041 within 8 days of the termination of the insurance relationship and the start and end of the interruption.

The return of the self-employed person for the period not yet covered by the return must be submitted in a separate return if the right to continue the activity of the self-employed person as a natural person under the Income Tax Act ceases during the period of cessation of the activity of the self-employed person.