Foreign Income as a Sole Proprietor

SZJA: foreign income follows the usual rules

If you have Hungarian tax residency (true for most sole proprietors living and registered in Hungary), your worldwide income, including income from foreign clients or platforms, is taxed in Hungary, under the usual flat-rate or vállalkozói szja rules. There's no separate "foreign income tax": you convert the amount received in foreign currency to HUF (using the MNB exchange rate, or your chosen bank's rate, on the date of performance), and that HUF figure counts toward your revenue exactly as if it came from a domestic client.

VAT: services to an EU business client - the reverse charge

If you provide a service to a VAT-registered business client established in another EU member state, the place of performance under the general rule is the client's country, not Hungary. In that case you don't charge Hungarian VAT: the invoice shows a net (VAT-excluded) amount, marked "reverse charge": the client accounts for VAT in their own country.

To do this, though, you need a Community VAT number from NAV (as a sole proprietor, via form T101E or the Webes Ügysegéd), and you need to report these sales in a recapitulative statement (összesítő nyilatkozat), typically on the same frequency as your VAT return, by the 20th of the month following the reporting period.

An important, often-missed rule: this obligation applies even if you're otherwise VAT-exempt (alanyi adómentes). VAT exemption only covers your domestically-performed sales; for a service provided to an EU business client, you can't act in an exempt capacity: you need a Community VAT number and must invoice with the reverse-charge marking, regardless of how far your domestic revenue is from the exemption threshold. (This article covers reverse charge from the supplying side; if you're the one using a foreign service, i.e. you're the customer, see the VAT basics article for the mirror-image rule.)

VAT: a business client outside the EU

If the client is a business established outside the EU (for example, in the United States), the place of performance is again the client's country: this transaction falls outside the territorial scope of the VAT Act. The invoice doesn't say "reverse charge" here; it carries a different note referencing that it's outside the Act's scope, and the transaction doesn't go into the recapitulative statement (which only covers intra-EU transactions).

For many international platforms (Upwork, Fiverr, and similar), it's worth checking the platform's own terms: often the platform operator itself (typically a US company) is your contractual and invoicing counterparty, not the end client reached through the platform: this affects who, and under which country's rules, you actually need to invoice.

VAT: selling goods to EU private individuals (distance selling, e.g. Etsy, Amazon)

If you sell physical goods to non-VAT-registered private individuals in other EU member states, the "distance selling" rules apply. In 2026, there's a single, EU-wide annual threshold of 10,000 euros (the law itself is denominated in euros; roughly 3,100,000 HUF) for this: below it, you can invoice under Hungarian VAT rules, above it you'd either need to register for VAT separately in each affected member state, or, the simpler path for nearly everyone in practice, choose the OSS (One Stop Shop) scheme, which lets you settle every affected member state's VAT through a single Hungarian-language interface and return.

VAT: exporting goods outside the EU

Exporting goods to a country outside the EU is VAT-exempt (0%), but you need to keep the customs documents proving the goods left the EU to support the exemption. This rule applies to physical goods, not services: services follow the place-of-performance rules covered above.

Quick reference

• Service to an EU business (VAT-registered) client: reverse charge, needs a Community VAT number and a recapitulative statement; VAT exemption doesn't apply here.
• Service to a non-EU business client: outside the scope of the VAT Act, no Hungarian VAT, no recapitulative statement.
• Goods sold to an EU private individual (distance selling): Hungarian VAT up to the 10,000 EUR threshold, OSS or local registration above it.
• Goods exported outside the EU: VAT-exempt, supported by customs documents.

This article is for general information only, does not constitute tax advice, and doesn't cover every scenario (for example, the special rules under double-taxation treaties). Source: the VAT Act, 2007. évi CXXVII. törvény, primarily § 37 on place of performance and Chapter XIV/B on distance selling (net.jogtar.hu).

Last updated: July 31, 2026.