HUNGARY – Small Business Tax 2021
The companies fulfilling the conditions or newly formed companies and branch of foreign companies are also able to choose this special taxpayer status since y2013. The tax rate of the small business tax (SBT) is 16% in y2016, 14% in y2017, 13% from y2018, 12% from y2020 and 11% from y2021. The minimum tax base is the annual labor cost (wages, bonuses, etc.).
The Small Business Tax actually replace the corporate tax (9%), the social contribution tax (15,5%) and contribution of the vocational training fund contribution (1,5%). The corporate tax payers can choose the SBT if employ less than 50 person and their income and total assets are under HUF 3000 million in the previous business year.
It means that the employers can reduce the social tax charges to 11%, but their general tax rate on the profit paid to shareholders is also 11%. Since y2017 the calculation of the SBT changed and the minimum SBT base is roughly the labor cost of the companies.
The tax base should be increased with the following transactions:
- dividend paid to shareholders
- reduction of the issued capital
- gain of petty cash balance
- tax penalties
- non-business purpose payments
- non-qualifying uncollectible receivables
The tax base should decreased with the following transactions:
- dividends received
- increase of the issued capital
- decrease of petty cash balance
The SBT payers don’t have to have employees and have no obligation to pay dividends to their shareholders. The SBT payers have no minimum tax base requirements.
The branch of foreign companies do not pay dividends to shareholders according to the HU laws, so the profit of the branch can be transferred small business tax free to the mother company, except the SBT payable on labor cost. The branch of foreign companies has to managed by Hungarian resident person.
Local business tax of SBT payer
The SBT payers can choose special status for the local business tax well. It means that the base of the local business tax can be the 120% of the SBT base. The general rate of the LBT is the same as for any other taxpayer, 2%.