Hungary is an EU market where the contractor’s tax regime matters more to a foreign client than the payment rail. Most freelancers invoice as an egyéni vállalkozó (sole proprietor) on átalányadó, a flat-rate regime that got cheaper in 2026. The once-popular KATA lump-sum tax is now closed to anyone invoicing a company, foreign clients included, so the first question to a new contractor is which regime they are on.
The egyéni vállalkozó on átalányadó
NAV, the tax authority, keeps the register of sole proprietors; since 19 February 2026 registration runs through the Vállalkozói Ügysegéd on NAV’s client portal. On átalányadó, taxable income is revenue minus a fixed cost ratio set by activity (nav.gov.hu, checked 2026-09-29):
| Activity | Cost ratio (2026) |
|---|---|
| Any activity not listed below, which includes software development and consulting | 45% (40% until 2025) |
| Listed trades: construction, manufacturing, repairs (including computer repair), transport, photography and others | 80% |
| Retail only | 90% |
- Revenue ceiling: ten times the annual minimum wage, HUF 38,736,000 in 2026 (HUF 193,680,000 for retail only). A contractor who exceeds it leaves the regime and cannot return for the rest of that year and the following 12 months.
- Tax-free portion: income up to half the annual minimum wage, HUF 1,936,800, is tax-free; NAV puts the revenue at which a 45%-ratio contractor starts paying tax at HUF 3,521,455 (nav.gov.hu, checked 2026-09-29). The rest is taxed at the flat 15% personal income tax rate (PwC, checked 2026-09-29).
- Contributions: 18.5% social security contribution and 13% social contribution tax on the flat-rate income, each on a monthly base of at least the minimum wage (HUF 322,800), or the guaranteed wage minimum (HUF 373,200) where the main activity requires secondary qualifications. The 112.5% multiplier on the social contribution tax base was dropped from 2026.
KATA since 2022: closed to B2B
KATA survives in a narrow form: a main-occupation sole proprietor pays a fixed HUF 50,000 a month, with a 40% tax on annual revenue above HUF 18 million. The catch for you is the payer rule. KATA status ends on the day before the contractor receives revenue for goods or services from a payer, and the law defines a foreign payer as any foreign-resident legal person or other organisation (nav.gov.hu, checked 2026-09-29). In practice KATA is for sales to private individuals. A KATA contractor who wants to work for you files form T101E and moves to átalányadó mid-year; paying through a platform does not avoid the rule, because the platform is a company too.
VAT and invoicing
A contractor can stay VAT-exempt up to HUF 20 million of revenue in 2026, rising to HUF 22 million in 2027 and HUF 24 million in 2028 (nav.gov.hu, checked 2026-09-29). A B2B service to a business abroad is supplied where the customer is established, so it carries no Hungarian VAT; invoices to EU businesses show “fordított adózás” (reverse charge), and serving an EU client requires a HU community VAT number (nav.gov.hu, checked 2026-09-29). Since 4 January 2021 the contractor reports every invoice to NAV’s Online Számla system, including invoices to foreign clients (nav.gov.hu, checked 2026-09-29).
The Kft option
Some senior contractors invoice through a Kft (limited liability company): minimum share capital HUF 3 million, at least half paid in before registration (drnagyildiko.hu, checked 2026-09-29), and 9% corporate income tax on profit (PwC, checked 2026-09-29). It suits contractors above the átalányadó ceiling. For you, a Kft means a contract with a company rather than an individual, and a W-8BEN-E instead of a W-8BEN.
Reclassification risk
Hungarian authorities look at substance over form, and no single contract clause settles it. The markers NAV and the labour inspectorate check are exclusivity to one client, fixed office hours, company equipment, integration into your organisation, fees that resemble a salary and the absence of business risk. If the relationship is recharacterised, the back-bill covers the whole period: 13% social contribution tax, 18.5% social security contributions and 15% income tax, with late-payment interest and tax penalties of up to 50% (200% for deliberate evasion) (drnagyildiko.hu, checked 2026-09-29). Project-scoped work for several clients, on the contractor’s own schedule and tools, is low-risk.
What to put in the contract
- A written services agreement with the egyéni vállalkozó or Kft, scoped to deliverables, rate and currency.
- IP in writing. Under the Copyright Act (Act LXXVI of 1999) economic rights generally cannot be transferred and licences must be in writing (net.jogtar.hu, checked 2026-09-29); software is one of the statutory exceptions that allow a full transfer (doboslegal.eu, checked 2026-09-29). The rule that hands an employee’s work to the employer does not apply to a contractor, so spell out the transfer or an exclusive licence.
- Independence markers: the contractor’s own tools and schedule, and the right to serve other clients.
- The contractor’s tax regime, stated in writing, so a KATA surprise does not surface after the first payment.
Taxes and paperwork on your side
Pay gross against invoices; a foreign client withholds nothing in Hungary. US payers collect a W-8BEN (W-8BEN-E from a Kft) and file no 1099. The US–Hungary treaty was terminated effective 8 January 2023 and stopped applying to withholding taxes from 1 January 2024 (irs.gov, checked 2026-09-29), so the W-8BEN carries no treaty claim; work done in Hungary is foreign-source income for US purposes anyway. EU payers self-account for VAT under reverse charge.
How to pay contractors in Hungary
The contractor invoices in HUF or EUR, and you pay by local forint transfer through a provider, by SEPA in euro, or through a platform. Domestic instant payments settle forint amounts under HUF 20 million within five seconds, around the clock (mnb.hu, checked 2026-09-29). Rails, fees, the pricing breakeven and platforms are compared on our Hungary contractor payouts page.
Contractor of Record in Hungary
A Contractor of Record signs with the contractor so you contract with it rather than with the individual. 4dev acts as Contractor of Record — the contracting party for each contractor — which reduces reclassification risk. Deel, Remote, Multiplier, Rivermate and Mellow also sell Contractor of Record products; how much liability, if any, moves to the provider depends on the liability clause in its agreement, not on the product name. A COR does not change the KATA rule, since it is a company paying the contractor. For a full-time, exclusive, directed role, an Employer of Record is the cleaner route. Compare providers in our COR rating.