The government amended the KATA (Lump sum tax of small enterprises) tax law. As of September, KATA taxpayers will only be able to issue invoices to private individuals. This excludes hundreds of thousands of small businesses from the favorable tax regime. In Hungary, about 400,000 private entrepreneurs have used the tax system introduced ten years ago, and more than 300,000 of them will have to look for another tax solution – or give up their previous job.
All KATA taxpayers will have to declare to the tax authority whether they want to stay in the modified system or not. This will be possible from August 1 to September 25.
As of September, for those who no longer meet the new KATA requirements, the tax authority will publish more options by August 15 and they can be taxed at a flat rate. A declaration of “compulsory conversion” can be submitted until October 31. However, after the switch, these entrepreneurs should also expect to have to take a detailed inventory of their assets in January.