Validity and usage of tax number for freelancing

Hello everyone,

I originally arrived to Hungary as a student couple of years ago, so I have a tax id number, but I changed my residence permit status from 'studies' to 'other', which doesn't allow me to perform any work activity.

While this was happening I was studying web development and some digital agency from Germany got interested in my personal projects. They went through the interview process with me and at the end proposed me to become a part of their network so they could send me some occasional freelance work. They also asked me to provide them either a tax id or VAT, although they don't really provide me any contract (I assume that actually their clients will provide me a contract if they find me fitting).

So I think if I will decide to work with them, I probably should change my visa status again so I can have the right to earn within the country, but I was wondering, is it an option to work from Hungary as a freelancer with just a tax id at all? Don't I have to get KATA or EVA or something similar? And if yes than does anyone know how I would be taxed? Also, can the tax id still be valid if I already changed the resident permit status?

This has been discussed many times here. You can search the forums for details.

In short:

You need to start a business or declare a tax basis such as KATA. For some business types, you may need to show an accredited diploma for the work you will be doing. Also, if you work for clients in the EU you have to collect VAT (or at least pay the HU tax office the VAT amount from your income if you do not have a VAT number) on services such as web design To make it more complicated, you can declare to be VAT except in Hungary, but that really only applies to HU clients. Finally, even if you do not work, you may still be liable for tax in Hungary on other non work income (royalties, dividends, etc.) -- or not if the income country source has a Tax Treaty with Hungary.

I am assuming your tax number should be still valid despite your  "no work" residence status (but you need to ask at the tax office to make sure).

Allow me to point out the difference between "tax id number" and "tax number". I'm not sure that these are the appropriate terms in english, but hopefully you'll get the idea. Everybody who registers as a resident will get a "tax id number". With this you cannot issue invoices. You can do some occasional work, though, if you have the right visa, but in your case this is not an option. To get a "tax number" that also allows you to issue invoices that many customers would expect, you have to either request it as a private person, this would suffice for some occasional work. The next step up in complexity and possibilities is registering as a self-employed person as KATA or EVA. And the final, most complex option is registering a company, e.g. an LTD.

Edit: the original, hungarian terms that I tried to translate are adóazonosító jel = "tax id number" and adószám = "tax number".

klsallee, atomheart, thanks for your detailed responses!
I don't think I am ready to go full self-employed at this point, so I was thinking more in lines of getting a full-time job while sometimes receiving gigs from that agency. Of course while minding all the signed NDAs.
So yeah, thanks for the details!
Marry Christmas and happy holidays!

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