Legal forms of business in Hungary 2026: sole trader, Kft or KATA?

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You live in Hungary, or plan to, and you need a legal wrapper for your freelance work or start-up. After reading this, you will know which business forms exist and what each costs in tax in 2026. You will also know how to register without falling into the management trap.

Hungary legal forms of business in 2026: the key figures

What changed for 2026

• New registry route for sole traders. NAV's Entrepreneur Services Portal has been open since 19 February 2026. New sole-proprietor matters could be started on nyilvantarto.hu only until 1 March 2026 (NAV Booklet 99).
• Higher minimum bases. The minimum wage is HUF 322,800 and the guaranteed wage minimum HUF 373,200 a month from 1 January 2026, per NAV Booklet 12. Both drive minimum contributions for owners who work in their business.
• Dividend cap up with it. The 13% social contribution tax cap on dividends rises to HUF 7,747,200 (24 times the minimum wage).

Is this guide for you?

Read on if you…

• freelance, consult or run an online business and live in Hungary;
• are torn between a sole trader status and a Kft;
• plan to hire, raise money or hold IP through a Hungarian entity.

Probably not your case if you…

• are salaried by one employer with no side business;
• only need a holding structure abroad: start with international tax treaties of Hungary.

Which business forms exist in Hungary?

Company law sits in the Civil Code (Act V of 2013, Ptk.). The NAV summary on business associations lists the joint-stock company, the limited liability company (Kft), the general partnership (Kkt) and the limited partnership (Bt). Sole traders sit outside the Civil Code, under their own act.

A branch is a unit of a foreign company without its own legal personality, registered in the Hungarian company records. Good news for groups: Hungary levies no withholding tax on dividends paid by a resident company to another company, resident or not.

Sole trader or Kft: which suits a freelancer?

Honestly? It depends on revenue, costs and who your clients are. Here is how each option works in 2026.

The sole trader options

1. Flat-rate taxation (átalányadó): a fixed cost ratio replaces real costs. NAV puts it between 45% and 90% of revenue, depending on the activity. You pay 15% PIT and contributions on the rest.
2. Entrepreneurial income tax (vállalkozói személyi jövedelemadó): you deduct real costs and pay 9% on business profit, per the NAV private persons summary. Withdrawals are then taxed separately.
3. KATA (kisadózó vállalkozók tételes adója): HUF 50,000 a month covers tax and contributions. Income above HUF 18 million a year bears a 40% special tax.

Here's the catch with KATA. Your KATA status ends the day before you earn income from a payer, meaning a business client, foreign ones included. Taxi transport is the only listed exception. In practice, KATA only fits work for private individuals.

Outside KATA, sole traders pay the 18.5% contribution and 13% social contribution tax on minimum bases tied to the minimum wage. They apply even in a quiet month, so budget for them from day one.

The Kft route

Profits pay 9% corporate tax. If your declared profit is lower than 2% of total adjusted income, the 2% income minimum becomes the base. Losses carry forward for five years and can absorb up to 50% of each year's base, per NAV Booklet 41.

If you work in your own Kft, you are insured as a member. The 18.5% contribution and 13% social contribution tax then apply on at least HUF 322,800 a month, or HUF 373,200 where your main activity needs secondary education (NAV Booklet 12).

Taking profits out as dividends adds 15% PIT and 13% social contribution tax. The 13% stops once your yearly income subject to it reaches 24 times the minimum wage, HUF 7,747,200 in 2026. Salary that already bore the tax counts towards that cap.

Two extras. Municipalities levy local business tax of up to 2%. Medium and large companies also pay a 0.3% innovation contribution; micro and small enterprises are exempt, per PwC (secondary). Read corporate income taxes in Hungary and business expenses in Hungary for the detail.

What about KIVA?

KIVA (kisvállalati adó) is an optional company tax built around payroll and distributions rather than accounting profit. You can opt in with up to 100 staff and up to HUF 6 billion of revenue and balance sheet total. You can stay until you reach 200 staff or HUF 12 billion of revenue, per the government's KIVA page. It tends to suit payroll-heavy companies that reinvest.

How do you register a business in Hungary, step by step?

A Kft or partnership

1. Pick a name and a registered seat. A seat service provider can supply the address.
2. Prepare the deed of foundation under the Civil Code and file it with the court of registration (cégbíróság).
3. Include the tax identification numbers of the executives. NAV registration runs through this one-stop filing, per NAV Booklet 01, and typically takes one working day.
4. Report the remaining details to NAV within 15 days of registration.
5. Choose your VAT position. Below HUF 20 million of supplies you may opt for the small business exemption, per NAV Booklet 14.
6. Register for local business tax with your municipality and hire a licensed accountant.

A sole trader

1. Register through NAV's Entrepreneur Services Portal, the route open since 19 February 2026. The old nyilvantarto.hu route closed on 1 March 2026.
2. Choose your tax regime at the start: PIT with real costs, flat-rate or KATA.
3. Declare your VAT status, including the exemption if your supplies stay under HUF 20 million.

Want a second opinion before you file? Our business setup service checks the structure against your residency.

Where is your company really managed? The PE trap

Here's the catch for location-independent founders. Under most tax treaties, a company resident in two countries is allocated by its place of effective management, or by mutual agreement.

• Hungarian Kft run from abroad: your new home country may claim the company is managed there and tax its profits.
• Foreign company run from Budapest: Hungary may argue it is managed here and charge 9% CIT.
• Working in Hungary for a foreign company: your activity can create a permanent establishment (PE), a taxable presence, for that company.

Match your company to where you live and decide. See obtaining Hungarian tax residency and ceasing Hungarian tax residency. Comparing countries? Read about business forms and professional statuses in Malta and legal forms of business in Austria.

Common mistakes (and what they cost)

• Choosing KATA while billing companies → KATA ends the day before the first business payment, and normal taxes apply from then.
• Opening a Kft for a tiny solo business → minimum contributions on HUF 322,800 a month, plus accountant fees, eat the 9% advantage.
• Running a foreign company from Budapest → possible Hungarian 9% CIT on its profits, plus penalties if undeclared. See tax fraud regulations in Hungary.
• Taking cash out of a Kft without a dividend decision → the payment can be reclassified as pay, with full contributions.
• Forgetting the 15-day NAV report after registration (unregistered sites, foreign bank accounts, records location) → NAV can impose a default penalty, and your file starts with a compliance flag.

Frequently asked questions

What is the most common business form in Hungary?

The Kft, a limited liability company, is the standard vehicle for small and mid-sized businesses. It protects your personal assets and pays 9% corporate income tax. Solo freelancers often start as a sole trader instead, because there is no capital to commit and flat-rate taxation keeps admin light. Partnerships (Bt, Kkt) exist but expose at least one partner to unlimited liability.

Can a foreigner open a Kft in Hungary?

Yes. Foreign individuals and companies can own a Kft, and the managing director need not be Hungarian. You need a registered seat in Hungary, and the filing goes to the court of registration. The executives' tax identification numbers must appear in the application. NAV registration then runs through that same filing, usually within one working day.

How is a Kft taxed in Hungary in 2026?

The Kft pays 9% corporate income tax on its positive tax base, with a 2% minimum income rule. Local business tax of up to 2% applies on top. When you take dividends, you pay 15% PIT and 13% social contribution tax. The 13% stops once your yearly income subject to it reaches HUF 7,747,200.

Is KATA still available for freelancers in Hungary?

Yes, in a narrow form under Act XIII of 2022. You pay HUF 50,000 a month, and income above HUF 18 million a year bears a 40% special tax. But KATA ends as soon as you earn income from a business payer, foreign ones included. It only works if your clients are private individuals.

Can I run a Hungarian company while living abroad?

You can, but watch where decisions are made. If you, as sole director, run the Kft from your new country, that country may say the company is managed there. Treaty tie-breakers then decide where profits are taxed. Plan board decisions carefully, or appoint a director who really manages it from Hungary.

What is KIVA in Hungary?

KIVA is an optional small business tax under Act CXLVII of 2012. You can opt in with up to 100 staff and up to HUF 6 billion of revenue and balance sheet total. Its base is built around payroll and distributions, not accounting profit. Companies can stay in until 200 staff or HUF 12 billion of revenue. It suits payroll-heavy firms that reinvest.

Related guides

• Corporate income taxes in Hungary
• Business expenses in Hungary
• Hungary tax landscape overview
• Specific taxes in Hungary: VAT, duties and local taxes
• Tax incentives for expats and digital nomads in Hungary
• Legal forms of business in Austria
• All country tax guides

Sources

• A short summary on the taxation of business associations (2026) – NAV
• Booklet 41 – Key rules of the taxation of business associations – NAV
• Booklet 12 – Contribution and social contribution tax by business entities (2026) – NAV
• Booklet 99 – Itemised tax for small taxpayers (KATA), 2026 – NAV
• Booklet 01 – Registration with NTCA – NAV
• Booklet 14 – Start-ups in the VAT regime (2026) – NAV
• Kisvállalati adó (KIVA) – Hungarian Government
• Hungary – Corporate – Taxes on corporate income – PwC Worldwide Tax Summaries (secondary)

This guide is general information, not personalised tax advice. See how we research and review.