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Is it legal to do freelancing in addition to work in my main job?

I am a non-EU citizen and I want to start looking for jobs in Budapest as a graphic designer. This means, hopefully, I will enter Hungary on a work visa and get a work permit.

In addition to working in my main job, I would really like to be able to sell digital prints online on Etsy (for example) as a supporting job.

Will I be breaking any laws if I registered for self-employment in Hungary in this case?
In other words, is it legal for a non-EU citizen working in Hungary to work in a second job (including self-employment)?

Any answers are appreciated!

The Answer would depend on the Terms contract you signed when you were first Employed,all of that agreement is legally binding.

Some contracts forbid you from working for say competitors or others but these are hard to actually enforce.  Not your situation (presumably) but civil servants are not allowed to have two jobs.

But anyway, presumably you have more than one source of income other than your PAYE (Pay As You Earn) day job, so you'll have to report the additional income to the Tax Office. 

A more detailed answer would be just too complex to discuss in this forum especially as your transactions may not actually take place within the EU (as you said you were a 3rd country national).   European VAT is total nightmare - the rate depends where the buyer is.  It's a terribly complex system and very difficult for small resellers.

fluffy2560 :

European VAT is total nightmare - the rate depends where the buyer is.  It's a terribly complex system and very difficult for small resellers.

True.

But sites like Esty usually take care of EU distance selling VAT automatically, so the seller does not have to deal with the details.

And one can also declare a side job as VAT exempt in Hungary for intra-Hungary sales, and not deal with VAT as long as this work does not earn more than the exempt limit for small businesses.

Mercurien :

The Answer would depend on the Terms contract you signed when you were first Employed,all of that agreement is legally binding.

Thank you :)

I will try to have a contract that will allow me to do self employment in addition to my main job.
My main concern is if it's legal in the Hungarian law to do this. for the example,  people working under tier2  visa in the UK are not allowed to take on self employment in addition to their main job.

fluffy2560 :

Some contracts forbid you from working for say competitors or others but these are hard to actually enforce.  Not your situation (presumably) but civil servants are not allowed to have two jobs.

But anyway, presumably you have more than one source of income other than your PAYE (Pay As You Earn) day job, so you'll have to report the additional income to the Tax Office. 

A more detailed answer would be just too complex to discuss in this forum especially as your transactions may not actually take place within the EU (as you said you were a 3rd country national).   European VAT is total nightmare - the rate depends where the buyer is.  It's a terribly complex system and very difficult for small resellers.

Thank you for your reply ^_^
As I mentioned in my previous reply, my main concern is if it's legal in the Hungarian law for a non-EU citizen working in Hungary under a work permit to take on supplementary self-employment.
I sent an email to the the Office of Immigration and Asylum about a month ago but they did not reply to me.

Teddy Gilbert :

As I mentioned in my previous reply, my main concern is if it's legal in the Hungarian law for a non-EU citizen working in Hungary under a work permit to take on supplementary self-employment.

If your work contract does not disallow it (as others already mentioned), then yes it is okay. But you have to still either declare your free lance work by either registering with the Hungarian tax authority (NAV) as a free lance worker, or by starting a small business. And pay all applicable income taxes. The tax paperwork here for freelance or small businesses can be onerous. In fact, if you start a small business, you are required to have an accountant. Hungary is not really small business friendly relative to other countries.

Teddy Gilbert :
Mercurien :

The Answer would depend on the Terms contract you signed when you were first Employed,all of that agreement is legally binding.

Thank you :)

I will try to have a contract that will allow me to do self employment in addition to my main job.
My main concern is if it's legal in the Hungarian law to do this. for the example,  people working under tier2  visa in the UK are not allowed to take on self employment in addition to their main job.

That's understandable. On the other hand, there are a variety of visas in the UK which would be easier to answer.  If memory serves me correctly, non-EU students can work about 20 h a week and after graduation for a short period of 3-4 months.  But that's another story.   

One could argue that you are not self-employed in Hungary but elsewhere (as your work could be sold from another country) and then your major issue is tax. 

It's not like you are going to be setting  setting up a plumbing business and drive around in a van within Hungary.

klsallee :

The tax paperwork here for freelance or small businesses can be onerous. In fact, if you start a small business, you are required to have an accountant. Hungary is not really small business friendly relative to other countries.

This seems a little bit discouraging :(
Do you have any idea about the estimated cost of the accountant in Hungary.

klsallee :

Hungary is not really small business friendly relative to other countries.

What are some other EU  countries you think are small business friendly?
Thank you :)

fluffy2560 :

One could argue that you are not self-employed in Hungary but elsewhere (as your work could be sold from another country) and then your major issue is tax. 

It's not like you are going to be setting  setting up a plumbing business and drive around in a van within Hungary.

Do you mean that this could simply be declared and taxed in Hungary as a foreign income?
The plan is to open an Etsy shop, upload my digital products (no physical items will be sent from Hungary) and they will be sold on my Etsy shop to customers. Finally, Etsy pays the VAT and deposits my revenue every month in my bank account in Hungary.
Etsy by the way is an American company. But it's not like I'm working for Etsy; it's more like Etsy is helping me with selling to international customers and taking their own share of the sales.

The Plumbing van idea was funny by the way :D I imagined myself driving around in a van in Budapest :D

Teddy Gilbert :
fluffy2560 :

One could argue that you are not self-employed in Hungary but elsewhere (as your work could be sold from another country) and then your major issue is tax. 

It's not like you are going to be setting  setting up a plumbing business and drive around in a van within Hungary.

Do you mean that this could simply be declared and taxed in Hungary as a foreign income?
The plan is to open an Etsy shop, upload my digital products (no physical items will be sent from Hungary) and they will be sold on my Etsy shop to customers. Finally, Etsy pays the VAT and deposits my revenue every month in my bank account in Hungary.
Etsy by the way is an American company. But it's not like I'm working for Etsy; it's more like Etsy is helping me with selling to international customers and taking their own share of the sales.

The Plumbing van idea was funny by the way :D I imagined myself driving around in a van in Budapest :D

To comment more fully, we'd need to know in which country are you currently a resident? 

Generally you are taxed where you are resident and - and this is a relatively untuned and gross assumption - that's where you spend more than 185 days a year. 

None of us are experts here, we're only commenting on our own experiences.

fluffy2560 :

To comment more fully, we'd need to know in which country are you currently a resident?

From the expat path, Damascus Governorate, Syria

Teddy Gilbert :

Etsy by the way is an American company.

Where Etsy is located, and your relationship with Etsy, is irrelevant.

As already stated by others, regarding income taxes, what matters is where you are a resident. If you are a resident in Hungary, you are liable for taxes on all your world wide income. If you upload images to Etsy for sale, you are "working" in Hungary and are liable for Hungarian income tax. The only exceptions are with tax treaties where you actually earn such income, and the type of income you receive (for example dividend income from a business in another country). But these treaties are simply to avoid double taxation, not to eliminate income taxes. You have to still pay income taxes somewhere, in some country. And income from Etsy never qualified for such exemptions. The technical and accounting term for this is "nexus", in case you want to look up the term and explore the details further.

Teddy Gilbert :

Do you have any idea about the estimated cost of the accountant in Hungary.

From 10,000 to 30,000 HUF a month depending on how mans billings each month you process.

But, that is only for a small business. If you have a "freelance" permit, you do not need an accountant. But, you still have to report all your freelance income and pay all income taxes.

Teddy Gilbert :

What are some other EU  countries you think are small business friendly?

Most EU countries are pre-pay tax countries. That is, you have to pay income taxes each month even if you do not earn any income. Which, IMHO, can be quite brutal if you have limited starting capital. And tax law is complicated even for small businesses, often with little or no small business relief for rules and regulations only a large company with significant resources can afford to deal with.

UK citizens can correct me on this if I am wrong, but I believe the UK has a "pay as you go" system, where you pay only on what you earn each quarter. Which is much better. I do not know of any other EU country with a pay as you go system. But maybe others here do know of such EU countries.

Thank you everyone for your answers.

I just received a reply on an email I sent to the BAH. They said that if I want to take on freelancing in addition to working in my main job, I have to declare this fact when applying for the residence permit and I will have to inform the Tax office and Labour office as well.

They said I will have to pay HUF 25 000,-/month as tax for my freelance work in addition to my main job tax.

I don't think that it's going to be a 25000 HUF a month only. As far I understand from other threads, the taxes on freelancing can reach 70% of revenue (income+social contribution+ other stuff).

I also read that I will need to get a receipts book and I will have to fill the receipts in it and give a receipt to the customer every time I work. I wonder how this going to work in case I'm working online (on Esty to be more specific)

klsallee :

Most EU countries are pre-pay tax countries. That is, you have to pay income taxes each month even if you do not earn any income.

Does this mean in Hungary the 25000 HUF per month if did not earn any income?

Teddy Gilbert :
klsallee :

Most EU countries are pre-pay tax countries. That is, you have to pay income taxes each month even if you do not earn any income.

Does this mean in Hungary the 25000 HUF per month if did not earn any income?

Pretty much, yes.

Hungary is not a small business/startup friendly country. The government expects you to pay income and social taxes in advance even if you have no income.

This is unlike, for example, the USA, where you only post pay taxes on profit, which is more reasonable as most small businesses have not much profit the first year or two.

Teddy Gilbert :

I also read that I will need to get a receipts book and I will have to fill the receipts in it and give a receipt to the customer every time I work. I wonder how this going to work in case I'm working online (on Esty to be more specific)

Unbearably confusing, isn't it?

Again, I have not found Hungary to be really up to speed on these international, small business, Internet enabled options for small operators that actually encourage or promote small businesses regarding taxes. They only have these exorbitant flat fees. You have to hire an accountant (25,000 HUF a month) to deal with such issues to avoid such nonsense (which is the same price --- ironically). And the laws constantly change. I doubt the current government knows about Etsy or even cares.

Is there any wonder then why so many Hungarians I know are engaged in black market, off the book activities? Something expats have few chance of doing.

Personally I would not take a local job, I have taken a job of supporting my previous employer. I resigned but offered to give my know-how. (I think most employers can be flexible with "consultants", they have constraints with hiring people, but hiring very cheap consultants can be easy (a bill of EUR 2000 will give you net EUR 1300 (company car, health insurance, pension (very small or not). If comparing Hungary Kft with others I am actually quite happy.  (downside I have to consume capital, but when I left stressful job I accepted this). With EUR 2000 pm you can almost live like a king.

Keeping historic standards of living (without real job) is not easy when migrating from Western Europe but it should be accepted, you get many things in return (friendly people, nature, less bureaucracy, affordable properties, and many many more).
Disadvantage (financially) also in Hungary I feel that for any work (house, garden, ...) there are rates for foreigners. (still 2 x more effective than in ( my case Luxembourg) many other countries.
The language of course is also a big draw back (impossible to learn I think at my age).

To come back, yes the accounting company will set you back HUF 25.000 pm, however (in my case) they help you in many topics (VAT reclaim, fencing of garbage collection (no additional fees), etc.).

Last topic, very strange but if in Hungary you  buy a company car prices are much more attractive (in my case HUF 1.5 mln)

Best regards
Christof

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