Simplified Tax Regimes for Small Business – Hungary

Pay fixed HUF 50,000 monthly (≈€129) regardless of actual revenue (up to HUF 18 million annually). REPLACES personal income tax, social security contributions, vocational training tax. Simple, predictable, no surprises. Just pay HUF 50,000 every month.

Base HUF 50,000/month rate applies to revenue up to HUF 18 million annually (≈€46,496). Most freelancers and small service providers fall below this. Provides certainty for budgeting. Can scale business knowing exact tax cost.

Revenue exceeding HUF 18 million: pay additional 40% tax on EXCESS only. Example: HUF 20 million revenue → HUF 50,000/month on first HUF 18M + 40% on HUF 2M excess = total HUF 1,400,000 annual tax. Still reasonable.

Only individual entrepreneurs (egyéni vállalkozó), not companies. Maximum ONE KATA-payer per household (spouses can't both use). Must meet activity requirements. Popular among: freelancers, consultants, tutors, small service providers, online sellers, drivers.

HUF 50,000 payment COVERS: personal income tax, social security contributions (pension, health, unemployment), vocational training tax. Provides access to healthcare, pension accrual, unemployment protection. All-in-one tax solution.

KATA doesn't cover local business tax (helyi iparűzési adó). Municipalities can levy up to 2% tax on net revenue. Must register and pay separately. Also VAT: if turnover exceeds VAT threshold, must register and charge VAT separately from KATA.

Instead of tracking actual expenses, apply FIXED percentage. 40% expense ratio → 60% of revenue taxable (common default). 80% expense ratio → 20% taxable (often for low-overhead services). Saves massive accounting time. No need to keep expense receipts.

Available if annual revenue below: HUF 38.7 million (≈€99,966) for general activities (= 10× annual minimum wage 2026), OR HUF 193.7 million (≈€500,349) for retail (= 50× annual minimum wage). Limits prorated if start mid-year.

Calculate deemed taxable income (revenue × taxable percentage). Pay 15% income tax + 18.5% social security + 13% social contribution tax on this amount. Example: HUF 10M revenue, 40% expense → HUF 6M taxable → ~HUF 2.8M total tax+contributions.

Don't need full accounting, detailed expense tracking, complex books. Just maintain chronological revenue register: invoice number, date, client, amount, expense ratio. Dramatically reduces administrative burden. Can manage yourself without accountant.

Locked into deemed percentage even if actual expenses higher. Example: 40% deemed but 60% actual costs → still pay tax on 60% of revenue. Can't switch mid-year. Must evaluate if deemed expenses match reality. Better for service businesses with low real costs.

Freelancers, consultants, part-time entrepreneurs earning under HUF 18M annually. Want absolute simplicity. Don't mind fixed cost regardless of monthly fluctuations. Value predictability over optimization. Willing to sacrifice some savings for zero paperwork.

Service businesses with revenue HUF 18-38M. Actual expenses lower than 40-80% of revenue. Want simplicity but KATA limit too low. Don't want to maintain full accounting. Still desire significant tax savings vs standard regime.

Businesses with substantial real costs (inventory, materials, equipment, employees). Revenue exceeds flat-rate limits. Want to deduct ALL actual expenses. Willing to maintain proper books and hire accountant. Need accurate profit calculation for business decisions.