Are you considering freelancing in Hungary? If you want to do business on your own and work for various clients as you see fit, you can either be self-employed or start a company: Your options depend on your business plan and your residency status.
Make a living on your own in Hungary
Starting a business in Hungary is fast, easy, and straightforward, and the number of businesses is growing every year. However, before you take the first step, you should learn a bit about the available forms of business and the responsibilities that go with each, such as administrative duties, liability for damages, and taxes to be paid. Make sure you consult a Hungarian accountant beforehand or even find a tax advisory in Hungary, which is especially important if you have income from more than one country.
1. Self-employment as a freelancer
If you want to become a freelancer in Hungary, that is, self-employed instead of working for any separate legal entity, you already need to be a resident of Hungary or a citizen of the EU. If you are a third-country national, you can do that if you already have another type of residency, e.g. based on family unification or a work permit.
Setting up a freelancing business is possible entirely online through your access to the Hungarian electronic administration. For that, you will need to decide on your main and additional activities as well as on the tax regime beforehand. Some forms of self-employment do not require an accountant, but as an expat, your best bet is to consult one anyway, and then hire them to take care of the monthly reporting for you. Freelancing does not require a starting capital, but you will be liable for damages to the extent of your entire wealth, which might be a real risk depending on your field of operation.
2. Start a limited liability company
If you are not an EU citizen and not yet a Hungarian resident either, but want to base your Hungarian residency on your business operation, you cannot become a freelancer – however, you can set up a company of your own, without any local partners.
Company formation procedures in Hungary vary based on the company form. Your best bet is going for a limited liability company (LLC, abbreviated as KFT in Hungarian), which takes just 4-5 business days to set up, can be incorporated through an agent with a power of attorney, and you are good to go as soon as you find an accountant and set up a corporate bank account at a Hungarian bank. The starting capital is HUF 3 million (a little above EUR 8,000 currently), but it does not have to be deposited right away, and should anything happen, you will be liable for damages only up to the share capital of the company, without any risks to your private wealth.
If your goal is Hungarian residency, your safest bet, however, is finding a local employer and getting a work permit in Hungary – either as a full-time or part-time employee. Once you get residency with your work permit, you can start your own business on the side (provided your employment contract makes it possible – it is best to discuss this with your employer in advance). If the side business becomes more successful, you can switch to doing that full-time, in which case you will also need to switch your work permit to residency based on gainful activity in Hungary.
Preparing for staying in Hungary in the long run
After three years of Hungarian residency, you become eligible for permanent residency, which gives you more freedom regarding who you work for. You can keep your freelancing business or your company, and you can switch employers without waiting for approval from Immigration every time. After 8 years of residency, you can apply for citizenship, which grants you even more freedom and security.
Mind you, it makes sense to consider if you have any Hungarian ancestors because then you might already be entitled to Hungarian citizenship by ancestry. Hungary’s Citizenship Law allows for any descendants of former Hungarian citizens to claim citizenship if they can support their ancestry with documents, and becoming a citizen in just one year instead of eight can make your (business) life in Hungary so much easier.
Make the most of working for yourself
Freelancing in Hungary can give you the freedom to do what you want without committing all your energies to one employer. However, while you get a lot of freedom, you will also be responsible for a lot of administrative tasks that are normally handled by an employer. As a result, it makes sense to trust local partners with these background tasks for you (e.g. mail forwarding, accountancy, reporting) while you focus on growing your business and enjoying the freedom it gives you.
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