HUNGARY | Small business lump-sum tax (KATA)
The popularity of small taxpayers’ itemized lump-sum tax (KATA) grows unabated, with thousands of engineers, computer programmers, hairdressers and lawyers opting for one or other of these schemes.
The small business lum-sum tax is HUF 50 000 (app. EUR 156 ) per month, up to HUF 1 million (app. EUR 3125) per month revenue. The KATA payer – who can be self-employed or member of general or limited partnership with resident or non-resident physical person only – is able to be VAT registered, but it is not mandatory just in case the annual income exceeds the HUF 8 million in y2018 or HUF 12 million in y2019.
The partnership’s annual revenue limit is still HUF 12 million in case even though all of the members can have KATA status.
- The upper limit of revenues is raised to HUF 12 million. According to the amendment of the VAT law, the revenue limit of a taxpayer’s exempted status will be HUF 12 million, therefore the invoice of an entrepreneur with KATA can also be VAT-free up to this amount of revenue.
The rate of tax payable above the HUF 12 million (or HUF 1 million per month in case the business started during the year) revenue limit remains 40%.
- Change during the year: non-refundable development aid and aid received to cover costs are not part of the itemized tax base of small entrepreneurs.
- If the taxpayer has not received the value of their issued invoice, then the last day of earning the revenue is the day when their taxpayer status is terminated.
- After the termination of taxpayer status subject to KATA, this method of taxation cannot be chosen in the tax year and during the following period of 12 months. So far this rule has prohibited the “repeated choosing of KATA” for a term of 24 months.
- The acquisition of revenue from the lease out of real property must be reported to the tax authority within 15 days.
- The tax authority will not issue a certificate of income to a taxpayer who has not earned revenue in the tax year.
- The dividend-replacing tax of single-person enterprises, limited partnerships and general partnership is reduced to 15 per cent.