{"id":830,"date":"2021-01-27T11:48:00","date_gmt":"2021-01-27T10:48:00","guid":{"rendered":"https:\/\/www.whisperingtree.hu\/blog\/?p=830"},"modified":"2021-09-28T03:54:40","modified_gmt":"2021-09-28T01:54:40","slug":"40-extra-tax-in-hungarian-kata-taxation-from-january-2021","status":"publish","type":"post","link":"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/","title":{"rendered":"Significant changes in Hungarian KATA taxation from January 2021"},"content":{"rendered":"\n<p>Most people in Hungary is adopted to the situation that a new year also means new regulations in taxation. However, recent tax changes were quite advantageous. This is not obviously true for KATA taxation changes that take effect in January 2021.<\/p>\n\n\n\n<p>But what are these new KATA regulations and how they will affect your everyday life and, not least, your pocket?<\/p>\n\n\n\n<p>This blog post tries to summarize and explain the consequences of the amendments of the KATA tax law.<\/p>\n\n\n\n<h2>What will change in KATA from 2021?<\/h2>\n\n\n\n<p>There are three major topics that will change from 2021 in the KATA taxation <strong>that may dramatically affect your private enterprise<\/strong>. <strong>40% extra tax should be paid<\/strong> <strong>on<\/strong> <strong>incomes gained<\/strong> <strong>from<\/strong>:<\/p>\n\n\n\n<ul><li>another local Hungarian business<\/li><li>a particular foreign business<\/li><li>an affiliate business<\/li><\/ul>\n\n\n\n<p>In the following part of the post I will address all the above three fields.<\/p>\n\n\n\n<h2>40% additional tax on incomes gained from another Hungarian business<\/h2>\n\n\n\n<p>If you your income that you earn from one particular local Hungarian company exceeds 3 million HUF in a given year, you <strong>will have to pay 40% extra tax on the surplus<\/strong>. This is true for all the incomes that exceed the limit. I.e. if you get 3 times 4 million HUF from 3 companies, extra tax should be paid on each relation.<\/p>\n\n\n\n<h3>Why is that so?<\/h3>\n\n\n\n<p>The logic behind the decision of the Hungarian government is that such a relationship, where the income exceeds that limit, may be considered an employment contract instead of a business one. By \u201cpunishing\u201d these incomes with 40% extra tax, the law would like to encourage businesses to enter into an employment relationship.<\/p>\n\n\n\n<h3>Who pays the tax?<\/h3>\n\n\n\n<p>Not the KATA entrepreneur but the business that is the source of the income is obliged to pay the extra tax.<\/p>\n\n\n\n<h3>Why 3 million?<\/h3>\n\n\n\n<p>The answer is simple at this point: just because. I could not find any clear reference or statistical data (e.g. average wage or the like) that can back this limit.<\/p>\n\n\n\n<h3>Pros and cons<\/h3>\n\n\n\n<p>There are both pros and cons about this legislative change, however, it can be stated that this alteration will <strong>dramatically affect freelancers in a negative way<\/strong> especially those who work in the online space e.g. <strong>IT developers, designers and the like<\/strong>.<\/p>\n\n\n\n<p>Why? Since those enterprises tend to earn relatively high incomes from several projects usually offered by a few numbers of agencies.<\/p>\n\n\n\n<h2>40% additional tax on incomes received from a particular foreign business<\/h2>\n\n\n\n<p>The very same rule applies for income that a sole enterprise earns from a foreign business. However, in this case the government is not able to legally tax the foreign enterprise, so it taxes the Hungarian one. That means you.<\/p>\n\n\n\n<p><strong>So if it happens that you gain more than 3 million HUF income in a year from a non-Hungarian business, you will be obliged to declare and pay the 40% extra tax.<\/strong><\/p>\n\n\n\n<p>Again, this amendment dramatically affects freelancers who operate in Hungary but gain their incomes from international agencies and partners.<\/p>\n\n\n\n<h2>40% additional tax on incomes earned from an affiliate business<\/h2>\n\n\n\n<p>Last but not least, if a KATA taxpayer earns money from an affiliate (i.e. from another business that is not independent of the KATA enterprise), he or she will be required to calculate and pay 40% extra tax. In this case, there is no limit at all, <strong>so you will have to pay on every penny you earn.<\/strong><\/p>\n\n\n\n<h3>What is considered an affiliate business?<\/h3>\n\n\n\n<p>Well, this is not determined in the KATA tax law but in the corporate income tax law so I have to refer to that term.<\/p>\n\n\n\n<p>To put it simple, an affiliate is a business:<\/p>\n\n\n\n<ul><li>in which the taxpayer owns the majority of shares<\/li><li>in which the taxpayer has a major influence (i.e. more that 50% of the votes)<\/li><\/ul>\n\n\n\n<p>When determining the above ones, <strong>direct and indirect <\/strong>(i.e. when influence is gained through close relatives) <strong>ownership and influence <\/strong>should be considered as well.<\/p>\n\n\n\n<h2>Summary<\/h2>\n\n\n\n<p>Both the government and the enterprises can argue for or against these changes. All in all, I myself think that these changes affect most of my clients in a bad way.<\/p>\n\n\n\n<p>In case of IT developers, the amendments are rather unfair due to their market situation and, therefore, the 40% extra tax could be a disaster.<\/p>\n\n\n\n<p>A possible solution may be shifting to <strong><a href=\"https:\/\/www.whisperingtree.hu\/blog\/best-taxation-in-hungary-personal-income-tax-pit-kata-kiva-or-corporate-income-tax-cit\/\" target=\"_blank\" rel=\"noreferrer noopener\">KIVA taxation<\/a><\/strong> but that makes just everything more complicated.<\/p>\n\n\n\n<p>These alterations still do not make KATA and unattractive taxation system, however, in the future, very careful and precise planning and tax calculation will be necessary.<\/p>\n\n\n\n<h2>Contact<\/h2>\n\n\n\n<p>If you have further questions or would like to request and inquiry, please feel free to contact us.<\/p>\n\n\n\n<p>Web: <a href=\"http:\/\/www.whisperingtree.hu\">www.whisperingtree.hu<\/a><\/p>\n\n\n\n<p>E-mail: <a href=\"mailto:whispeirngtreebt@gmail.com\">whispeirngtreebt@gmail.com<\/a><\/p>\n\n\n\n<p>Tel\/VIBER\/WhatsApp: <a href=\"tel:+36205484103\">+36 20&nbsp;548 4103<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most people in Hungary is adopted to the situation that a new year also means new regulations in taxation. However, recent tax changes were quite advantageous. This is not obviously true for KATA taxation changes that take effect in January 2021. But what are these new KATA regulations and how they will affect your everyday &hellip; <a href=\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\" class=\"more-link\"><span class=\"screen-reader-text\">Significant changes in Hungarian KATA taxation from January 2021<\/span> r\u00e9szletei&#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":881,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[61,242],"tags":[452,461,460,231,371],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Warning! 40% extra tax for KATA businesses in 2021 - Whispering Tree Blog<\/title>\n<meta name=\"description\" content=\"From 2021, there will be significant changes in Hungarian KATA taxation. 40% extra tax should be paid on certain incomes.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\" \/>\n<meta property=\"og:locale\" content=\"hu_HU\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Warning! 40% extra tax for KATA businesses in 2021 - Whispering Tree Blog\" \/>\n<meta property=\"og:description\" content=\"From 2021, there will be significant changes in Hungarian KATA taxation. 40% extra tax should be paid on certain incomes.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\" \/>\n<meta property=\"og:site_name\" content=\"Whispering Tree Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/konyveloiroda.budapest\" \/>\n<meta property=\"article:published_time\" content=\"2021-01-27T10:48:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-09-28T01:54:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.whisperingtree.hu\/blog\/wp-content\/uploads\/2021\/01\/Private-enterprise-Hungary-40-extra-tax.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"753\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Whispering Tree\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@whisperingtreeb\" \/>\n<meta name=\"twitter:site\" content=\"@whisperingtreeb\" \/>\n<meta name=\"twitter:label1\" content=\"Szerz\u0151:\" \/>\n\t<meta name=\"twitter:data1\" content=\"Whispering Tree\" \/>\n\t<meta name=\"twitter:label2\" content=\"Becs\u00fclt olvas\u00e1si id\u0151\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 perc\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\"},\"author\":{\"name\":\"Whispering Tree\",\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/#\/schema\/person\/8b55019ca0a13b0e6deda034c4bc72e6\"},\"headline\":\"Significant changes in Hungarian KATA taxation from January 2021\",\"datePublished\":\"2021-01-27T10:48:00+00:00\",\"dateModified\":\"2021-09-28T01:54:40+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\"},\"wordCount\":778,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/#organization\"},\"keywords\":[\"2021\",\"40% extra tax\",\"40% KATA\",\"KATA\",\"Private enterprise\"],\"articleSection\":[\"In English\",\"Taxation in Hungary\"],\"inLanguage\":\"hu\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\",\"url\":\"https:\/\/www.whisperingtree.hu\/blog\/40-extra-tax-in-hungarian-kata-taxation-from-january-2021\/\",\"name\":\"Warning! 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