The sole proprietor (egyéni vállalkozó, EV) and the Kft. (Korlátolt Felelősségű Társaság) are Hungary's two most popular business forms for e-commerce entrepreneurs. Choosing between them depends on your current revenue level, growth plans, risk tolerance, and willingness to handle administrative complexity. Both structures have distinct advantages and trade-offs, so making an informed decision from the start can save significant time and money down the road.
Sole proprietor (EV) – Simple and low-cost start
Operating as a sole proprietor offers simpler administration and lower startup costs. Registration can be completed online through the Webes Ügysegéd portal in minutes, with no minimum capital requirement. The flat-rate taxation option (átalányadózás) is available for annual revenue up to HUF 24 million (or HUF 36 million for retail activities), providing a simplified tax calculation. Under flat-rate taxation, 40% of revenue is treated as a cost allowance (80% for retail), and the remaining income is subject to 15% personal income tax (SZJA) and 13% social contribution tax. Alternatively, the entrepreneurial personal income tax regime applies a 9% rate on business profits plus 15% SZJA on withdrawals. The major disadvantage of the EV structure is unlimited personal liability: the entrepreneur is personally responsible for all business debts with their entire personal estate.
Kft. – Limited liability and credibility
The Kft. provides limited liability protection, meaning members are only liable up to their capital contribution of HUF 3 million. The 9% corporate tax rate (TAO) is the EU's lowest, with dividend tax at 15% and social contribution tax at 13% on dividends up to an annual cap. The Kft. structure appears more credible to business partners, suppliers, and marketplace platforms like eMAG and Alza.hu, and it is significantly easier to obtain bank financing or attract investors. The Kft. also allows multiple owners and can issue different classes of ownership interests, providing flexibility for partnership structures.
Practical comparison by revenue level
At lower revenue levels (HUF 10-15 million annually), the EV with flat-rate taxation typically results in a lower overall tax burden. At medium revenue levels (HUF 15-30 million), both structures produce similar effective tax rates, but the Kft.'s liability protection becomes increasingly valuable as business risks grow. At higher revenue levels (above HUF 30 million), the Kft. is clearly more advantageous due to the lower effective tax rate and the protection of personal assets from business liabilities.
When to transition from EV to Kft.
Switching from sole proprietor to Kft. is recommended when annual revenue exceeds HUF 24 million and flat-rate taxation is no longer available, when personal asset protection becomes important due to growing inventory values or supplier obligations, when seeking investors or bank financing, when planning international expansion or cross-border marketplace sales, or when marketplace platforms require or prefer a corporate entity. The transition involves closing the EV activity and transferring assets to the new Kft., which requires careful planning to avoid tax complications. Zunapro supports both entity formation and the transition process, including tax optimization and marketplace re-registration.
