Navigating the GTR Taxation System in Hungary

Useful guide for Individual Entrepreneurs in 2025. Starting or managing a business in Hungary comes with many decisions, and one of the most crucial is choosing the right taxation system. For sole entrepreneurs, the General Rate Taxation (GTR) system—also known as Átalányadózás — offers a structured yet flexible way to handle taxes while allowing businesses to grow under certain conditions. But is it the right choice for you?

Imagine you’ve decided to take the leap into entrepreneurship. You’ve registered your business, set up your first clients, applied for residence permit, and now, it’s time to tackle taxation. The GTR system becomes an option if your earnings from the previous year remained within specific limits. As of 2025, this restriction stands at ten times the annual minimum wage, which translates to HUF 34,896,000. For those in retail, this limit is even higher, reaching HUF 174.480 million. 

Expense Ratios in the GTR Taxation System

One key difference in GTR taxation is that expenses aren’t tracked individually. Instead, predefined cost ratios simplify how taxable income is calculated.

In GTR different industries and professions are assigned predefined expense ratios. These ratios determine what percentage of your income is assumed to be business expenses, meaning you don’t need to track actual costs. Instead, taxes are calculated based on the remaining taxable portion.

Here are the main expense ratios and their applications:

• 40% Expense Ratio – The default for most businesses and self-employed activities.
• 80% Expense Ratio – Applies to specific professions, such as agriculture, construction, and repair services. The tax office assumes that 80% of the income goes to business expenses, leaving only 20% taxable.
• 90% Expense Ratio – Exclusive to retail businesses. This means only 10% of income is considered taxable, as the system assumes 90% is used for operating costs.

These fixed expense ratios simplify taxation, but they also mean that you cannot deduct actual business costs — only the predefined percentage applies.

Let`s see how does the 80% expense ratio actually work. Let’s say you’re a freelance photographer. You earn HUF 1,000,000 in a given month. Taxable Income Calculation:

• 80% (HUF 800,000) is automatically considered business expenses—this means you don’t have to prove actual costs.
• The remaining 20% (HUF 200,000) is your taxable income, on which you will pay personal income tax (SZJA), social security contributions (TB), and social contribution tax (SZOCHO).

The payed taxes according to 2025 Rates:

Personal Income Tax (SZJA) – 15% of HUF 200,000 → HUF 30,000

Health Security Contribution (TB) – 18.5% of HUF 200,000 → HUF 37,000

Social Contribution Tax (SZOCHO) – 13% of HUF 200,000 → HUF 26,000

Total Tax & Contributions Paid: HUF 93,000

Who Can Use the 80% Expense Ratio?

You can only apply the 80% expense ratio if your income comes exclusively from one of the following professions:

• agricultural services, wildlife management services, forestry services, and green area maintenance
• fishing and fishery management services
• product manufacturing
• processing industry services, except for contract-based services
  construction services
• repair of industrial machinery, equipment, tools, vehicle repair, repair of personal and household items
• taxi passenger transport, car rental with a driver
• repair of computers and communication devices
  photography services
• laundry and cleaning of textiles and furs
• hairdressing, beauty care, pet grooming
• hospitality services (restaurants, catering)

If you combine these with other business activities, the lowest applicable expense ratio applies to all income sources. If your business spans multiple activities, the lowest applicable cost ratio will apply across the board.

Choosing GTR taxation for your individual business is about balancing flexibility with financial responsibility. For those in high-cost industries, the 80% expense ratio offers a simple, tax-efficient way to manage finances. But it’s crucial to ensure you qualify—otherwise, you may have to switch to the standard 40% ratio, which significantly increases taxable income. If you’re unsure, consulting ResidentHelp experts can help you optimize your taxation strategy and ensure compliance with Hungarian tax and immigration laws.