VAT Exemption (Alanyi Adómentesség) for Sole Proprietors

What is alanyi adómentesség?

Alanyi adómentesség is an optional status under Chapter XIII of the VAT Act, 2007. évi CXXVII. törvény (Áfa tv.), that exempts the taxpayer from charging, filing, and paying VAT on domestic sales of goods and services. In exchange, they also can't deduct VAT on their own related purchases. Any VAT-registered taxpayer can choose it, not only sole proprietors, but most who actually use it are lower-revenue sole proprietors or micro-businesses.

The revenue threshold and its scheduled increase

To choose alanyi adómentesség, the taxpayer's net (VAT-excluded) revenue for the calendar year, based on actual figures, or reasonably expected, must not exceed the threshold set by law. That threshold has increased in steps through 2026, and the law schedules further increases:

• through 2024, it was HUF 12,000,000 a year,
• in 2025, it rose to HUF 18,000,000 a year,
• in 2026, it's HUF 20,000,000 a year,
• from 2027, HUF 22,000,000 a year,
• from 2028, HUF 24,000,000 a year.

NAV's own guidance confirms this increase schedule. Revenue from domestic sales of goods and services (net of VAT) counts toward the threshold; the proceeds of selling fixed assets or intangible assets, among other exclusions, don't. For a proprietor starting the activity mid-year, a proportional share of the threshold applies.

How do you choose it?

Choosing alanyi adómentesség is done by declaration: an already-operating business declares it for the following year by December 31 of the preceding year (on the relevant page of the registration/change-notification form, or via the Online Form-Filling Application, ONYA), while a sole proprietor starting the activity declares it on the registration form filed with NAV when starting out. The choice applies to the whole tax year and can't be changed or withdrawn mid-year by choice.

What happens if you cross the threshold mid-year?

If revenue for the year exceeds the threshold, alanyi adómentesség ends immediately, as of the date the crossing transaction is completed; by law, the entire transaction that crosses the threshold becomes taxable, not just the portion above it. From that date on, VAT must appear on every subsequent invoice. The crossing must be reported to NAV within 15 days. An important "trap": input VAT on goods and services purchased during the exemption period can't be deducted later either, even after the exemption ends: the right to deduct VAT applies only to purchases made from the day after the exemption ends onward.

How long before you can choose it again?

If alanyi adómentesség ended because the threshold was exceeded, the taxpayer can't choose it again until the end of the second calendar year following the year it ended: for example, crossing the threshold in 2026 means the earliest it can be chosen again is 2029.

What alanyi adómentesség doesn't cover

Being alanyi adómentes doesn't mean the proprietor has zero VAT-related obligations. Certain transactions, such as some reverse-charge purchases, some intra-EU acquisitions of goods, or using services from abroad, can be VAT-liable even under alanyi adómentes status, and can require registering for a Community VAT number and paying VAT on those specific transactions regardless of the exemption. (See the VAT basics article for more on the Community VAT number and reverse charge; if a significant share of your revenue comes from foreign clients, e.g. via an EU platform, see EV Napló's guide on foreign income instead.) An alanyi adómentes proprietor must still issue a legally compliant invoice for every sale, marked "AM."

When does it pay off, and when doesn't it?

Alanyi adómentesség is typically advantageous when your clients are mostly private individuals or others who can't deduct VAT: the exemption then genuinely makes your service cheaper, since you don't need to charge them VAT. If your clients are themselves VAT-registered and would deduct the VAT you'd otherwise charge anyway, the exemption offers no real price advantage to them: in that case, the benefit is mainly simpler administration (no monthly/quarterly VAT return), along with the downside that you can't deduct VAT on your own purchases either.

This article is for general information only and does not constitute tax advice. Source: the VAT Act, 2007. évi CXXVII. törvény, primarily Chapter XIII (net.jogtar.hu), and NAV's guidance pages "Emelkedik az alanyi adómentesség értékhatára" and "Tájékoztató az alanyi adómentesség választására jogosító értékhatár emeléséről" (nav.gov.hu).

Last updated: July 31, 2026.