KATA Small Business & Entrepreneur
Depending on the size and type of their operation, small businesses and entrepreneurs in Hungary have access to a wide range of advantageous taxation choices. Both KATA and flat-rate taxation are administratively efficient arrangements that will be starting in the beginning of 2022.
Small Business
Entrepreneur E.V.
BT
KATA Based Company
KATA Accounting
Taxation and Support
Itemized Tax Liability of Small Taxpayers is abbreviated as KATA. By using this structure, you can pay most taxes and contributions with a monthly payment of HUF 25,000, 50,000, or 75,000 (depending on the specific structure you select). Included in these payments is the social contribution tax, which will drop to 13 percent as of January 1, 2022.
Since your contribution to the social security system is hidden if you only receive income (and pay taxes on it) from KATA, the law establishes a “calculation base” that entitles you to specific social services (e.g. pension, child benefits, sickness benefit). Every time the social contribution tax was decreased in the past, the calculation base for people who pay the monthly KATA was also increased. Even for individuals who pay the greatest amount of KATA, the duly increased calculation base this time around remains below the new minimum wage, which will have an impact on the amount of pension and sickness benefits (or other benefits linked to the calculation base) you may be eligible to receive.
A FLAT-RATE TAX
Typically, taxes are paid either following receipts or profits (which are your revenues minus your costs). Even if you still pay taxes after your gains with flat-rate taxation, your profits are NOT determined by the difference between the total of your incoming and outgoing bills. Instead, just a percentage of your revenues are regarded as your expenses (this can be 40 percent , 80 percent , or 90 percent , depending on your activity). The remainder will be regarded as your earnings, and you must pay taxes on your gains at a rate of 46.5%, specifically:
Personal income tax of 15%
18.5 percent of earnings go toward social security.
Social contribution tax of 13%
Despite the fact that 46.5 percent seems high
This still represents a better deal than what a business would incur in terms of total payroll costs;
this will be paid following your profits, which are determined by deducting your designated “percentage of expenses” from your revenue as previously said;
In fact, more things can be used to lower your tax base, which makes this structure even more appealing.
Contact
- Budapest, Mester u. 1, 1093, Hungary
-
+36 3078 62686
- info@kataaccountant.hu katahelp.hu@gmail.com
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