How to Handle Invoices from Private Individuals Renting Out Property to Your Company in Hungary

When your business rents property—flat for your foreign employees—from a Hungarian private individual who has a tax number but is not self-employed, specific tax rules apply. In this article, we break down how such an invoice should be treated in payroll and what reporting obligations you have as the payer.

Who Is the Lessor in This Scenario?

The lessor is a private individual with a tax identification number and a personal tax number, meaning they are registered for tax purposes but are not a sole trader or VAT-registered entrepreneur. If they are exempt from VAT (as is often the case with private individuals), the invoice will not include VAT.

The income earned from renting out the property falls under “independent activity income”, as defined by Hungarian personal income tax law.

What Happens If the Individual Uses a 10% Cost Deduction?

If the lessor submits a declaration that they apply the flat 10% cost deduction method, here’s what that means for your company:

90% of the invoiced amount is treated as taxable income for personal income tax (PIT) purposes.
10% is treated as a deductible cost automatically—no invoices or receipts are required.
The PIT rate is 15%, applied to the 90% income portion.

So effectively, the PIT equals 13.5% of the gross invoice amount.

Example:

If the invoice total is HUF 100,000:

Taxable base: 90% of HUF 100,000 = HUF 90,000
PIT: 15% of HUF 90,000 = HUF 13,500
Net amount to be paid to the individual: HUF 86,500

What Are the Employer’s Obligations?

As the paying company, you are the tax withholder. That means:

You must deduct the 13.5% tax (or 15% given no declaration presented) from the amount payable.
Pay the net amount to the individual (86.5% of the invoice total).
Report and transfer the tax to the Hungarian tax authority (NAV) by the 12th of the following month.

Reporting & Documentation Requirements

Here’s what else your company needs to do:

Monthly filing: Include the payment in the 08 form (monthly tax return), under “independent activity income.”
Tax payment: Transfer the deducted PIT to NAV no later than the 12th of the following month.
Year-end summary: Issue an M30 certificate to the private individual at year-end (or earlier if your cooperation ends), listing the total amount paid and taxes withheld.

Are There Any Other Contributions to Pay?

No. Since this is not an employment or entrepreneurial relationship, there are no social contributions or additional payroll taxes. You only need to handle the personal income tax (PIT) withholding.

Need help with payroll compliance or tax reporting in Hungary?

Passway helps companies manage tricky edge cases like private individual invoicing, freelance arrangements, and HR compliance — without the stress.
Reach out to us.

How to Handle Invoices from Private Individuals Renting Out Property to Your Company in Hungary

Who Is the Lessor in This Scenario?

What Happens If the Individual Uses a 10% Cost Deduction?

What Are the Employer’s Obligations?

Reporting & Documentation Requirements

Are There Any Other Contributions to Pay?

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