A freelancer is a person who works with several clients in different fields. They have different types of projects such as graphic design, marketing, and IT. More and more people work as a join this trend in Europe. Hungary offers a friendly environment for individual contractors. We have conducted research about freelancers in several countries in Europe, such as France, Bulgaria, Romania, and North Macedonia. In this article, we are going to discuss the freelancing in Hungary.
How many people work as a freelancer in Hungary
About 10 million people live in Hungary. In 2018, at least 4000 people worked as a freelancer in Hungary.
Does a Hungarian freelancer need to register or open a business
No, they do not. One of the significant advantages for the Hungarian contractor is the hassle-free requirement. It is not necessary to start a business. There are two legal solutions, especially for a freelancer. One is the temporary employment contract, and another one is the simplified employment (egyszerűsített alkalmazás).
The temporary employment can last for a maximum of three months. The employer is required to pay the insurance and income tax in advance for the freelancer.
- The social security contribution ranges from 17.5% to 36%.
- The advance income tax rate is 15%—the rate is calculated from 90% of the remuneration.For the simplified employment (egyszerűsített alkalmazás). With simplified employment, the freelancer does not need to sign a contract with the client. They only should conduct several registrations in the relevant government office. The disadvantages of simplified employment are strict time limitations and additional fees. The employer needs to pay 1000 HUF to the tax office per day.
What is the basic tax rate for the Hungarian freelancer
Several features influence the tax rate. If the freelancer earns more than minimum wage, then the income tax increases to 15%. Both the employer and employee are required to pay the social security contribution.
How to report the income tax as a freelancer
There are several ways to report the tax in Hungary. One of the popular ways to report the tax is via KATA. This option is popular among freelancers, and self-employed contractors in Hungary as the entrepreneur pays a flat rate monthly. Also, this option covers all of the additional fees like pension, social attribution. In 2020, the monthly amount for KATA is 50,000 HUF or 75,000 depending on the income. If your revenue exceeds a certain amount, you must pay the additional 40% income tax.
Another option is to pay contributions based on the revenue. The contribution is divided into three elements: pension, health, and social. If the revenue does not exceed the minimum salary, then contributions and tax rates are calculated on the revenue. This way, the tax office charges a lump sum. In addition, there is also a special 1.5% professional tax, which is paid by a limited number of professionals.
What is the additional requirement to work as a freelancer
To stay in Hungary, a freelancer needs to check additional details such as resident permits and work permits. If you are an EU citizen, you do not need to apply for a resident and work permit in order to stay in Hungary. For non-EU citizens, you need to check the requirement to apply for a residence permit in Hungary.
What is a better and safer way to work as a freelancer
As a freelancer, you have to check the legal requirements and take care of your rights. Are you looking for an effective way to protect your rights? Here is a simple way to protect your right and receive the payment in the way you want. With us, any client can only download the work after paying for it. Get a new project? We will confirm the cooperation with your new client.
What is a better way to work with Hungary freelancers?
Some additional work involves when working with an individual contractor. The HR department needs to handle the paperwork for letting freelancers onboard. With Useme, the recruitment process is much simpler than usual. The employer only needs to direct the freelancer to our site for signing the job contract and send the payment to our accounting system. We take care of the administrative work, secure the payment for both sides, and store all of the data for you.
Remember: working with freelancers is a great way to go global with your business.
Do you have more questions? Write to us at info@useme.eu
