Tax on Small Taxable Enterprises KATA

The flat-rate tax was created by the legislator to improve the tax conditions for small businesses directly serving individuals with their own goods and services. The taxpayer is exempt from the declaration and payment of personal income tax, social security contributions and social contribution tax.

The subject of Kata:

It may be chosen by a self-employed person registered as a sole proprietor in his/her main occupation, in the context of the activities recorded therein.

A self-employed person is considered to be self-employed as his/her main occupation if, at the same time as his/her self-employment:

• you are not employed for more than 36 hours

• is not considered a pensioner
• not insured abroad
• not qualifying for disability/rehabilitation benefits to the extent provided by law
• no parental parental employment relationship

You cannot opt for this tax treatment: sole proprietorships, partnerships, limited partnerships and law firms.

When is it optional?

Individual entrepreneurs in business:

You can opt for this tax during the year if you meet the conditions. Tax liability is established from the first day of the month following the month in which the election is declared.

Start-up self-employed persons:

A self-employed person who starts his/her activity during the year may submit the notification of his/her choice of kata at the same time as the notification to the National Tax and Customs Administration. In this case, tax liability is established on the date of registration of the sole proprietor.

Causes of cessation of tax liability:

• failure to issue an invoice or receipt

• employment of undeclared workers
• a default fine for the marketing of goods of uncertified origin, an excise duty
• has a net tax liability of more than HUF 100,000 on the last day of the calendar year.
• on the acquisition of income from long-term property rental activities
• obtaining income from a legal person
• ceases to be a small trader in a main occupation

Rate and payment of the flat-rate tax:

The monthly amount of the itemized tax is HUF 50 thousand.

Itemized tax is payable monthly, by the 12th day of the month following the month to which it relates Income limits and special tax:

Each active month provides the taxpayer with a revenue margin of HUF 1.5 million. If you have continued
your economic activity without interruption for the whole tax year, you can earn HUF 18 million by paying monthly itemized tax can be billed.  Once the limit is reached, tax liability is not extinguished, but any income in excess of the limit is subject to a special tax of 40%.