Self employment in hungary

Hello,

It's very simple.. Here exist a very simple self employing solution called KATA.
I think this is what you need.

Benefits: You dont need accountant at all.
Just the income counts, so you dont have to collect bills,calculate expenses.
The lowest tax in the EU, you have only pay 50.000.- HUF montly, it covers medical insurance as well. In addition you have to pay 1-2% tax, depends on what city you live.

What you have to do:
Paying monthly the 50.000.- Huf and annually 1-2% tax. Keep in mind, you have to pay on time, if don't, you will loose your right to this preferential taxation.

What you need:
Hungarian address,
Hungarian National insurance number (TAJ)

For specific jobs, may you have to provide some school degree, for example for carpenter you need to graduate a carpenter specific school or some constuction school.  It's not complicatedy they will tell you what you need .

ant75 wrote:

It's very simple....

(snip).....

For specific jobs, may you have to provide some school degree, for example for carpenter you need to graduate a carpenter specific school or some constuction school. .

So maybe not so simple. That is the problem in Hungary. Experience may not count. Decades of experience in construction... might not count. But passing an OJK course, and no experience, you are good to go. Some say the OJK courses are simply diploma mills used to generate income for OJK accredited schools......  But of course that is some people's opinion (well, actually, often an opinion with a bit of experience behind it). 

Well.. I think in this case you are wrong..
I try to explain why.

This "KATA" taxation form is one of the lowest taxation in europe. Does anyone know lower taxation ??
 
You can earn in a year 12.000,000,. Huf for 600.000.- HUF tax.
You can see, 5% tax, and this includes the medical insurance as well.

The Hungariann government says, here is the low taxation form, and not just low, you can pause anytime you want, you dont need accountant.
For exchange they want to you, to have a degree for that specific job, or at least pass  an OKJ course.  Its not too much.

You can make KFT (ltd), in that case nobody asks for degrees. Really. you can do every construction work, without any degree.  In this case the tax is at the normal level, so you will pay a price of a smaller new car yearly as tax.

And not not to  mention the backdoors..
In KATA form you can hire an emloyee who has adequate degree. 
Is it much ? No, at all, for example one day per week, for 2 hours. The taxes will cost you around 5000-8000 HUF monhly,  its full legal, not so complicated as well.

ant75 wrote:

Well.. I think in this case you are wrong..
I try to explain why.

This "KATA" taxation form is one of the lowest taxation in europe. Does anyone know lower taxation ??
 
....

If you look at taxation across countries (doesn't matter if EU or not), the actual effective rate of individual taxation is usually in the 30-50%'ish range.  This includes everything for an individual's existence - VAT, capital gains, income, stamp duties, excise taxes and so on.  So while personal income tax or revenue tax appears lower, you pay in other ways.   It might appear to be lower here on the headline rate, but it actually isn't overall as far as the actual tax burden goes.

ant75 wrote:

Well.. I think in this case you are wrong..
I try to explain why.

Hm... Whom were you talking to? Me? Because if so, your comments about taxation rates had nothing to do with what I said.... did they? So you seemed to have missed my point, did not much reply to what I said, which was about needing degrees, and instead decided to focus on another topic.

Do note, I made no reference to income or taxation which is your topic, but not mine in my prior post.

So where was I wrong?   

But since you mentioned it:

ant75 wrote:

This "KATA" taxation form is one of the lowest taxation in europe. Does anyone know lower taxation ??
 
You can earn in a year 12.000,000,. Huf for 600.000.- HUF tax.
You can see, 5% tax, and this includes the medical insurance as well.

True... if one makes 12,000,000 HUF a year (currently about 33,000 Euro). But for many businesses, who make less, and daily workers who may only earn somewhere between 5,000 to 10,000 HUF a day (for days they can find work -- which may not be every day) your numbers don't work out quite so great.

That is you cherry pick the best possible option to try to make a point. But by doing so you are promoting a false economy. In the real world, people may have a huge range of variation in their business work schedules and incomes. And so KATA may not be so great. Since one is taxed no matter what income ones makes. Which is pretty bad for poorer people. That is there are more possibilities in Hungary than the 30,000+ Euro crowed you are referencing.

Especially, when you consider, across the boarder, in Austria, your first 11,000 Euro income is tax free.

https://europa.eu/youreurope/citizens/w … dex_en.htm

Oh... And as Fluffy already said, VAT is also a tax. Which hits hardest in Hungary, especially the poorer members of society.

And, if one has a huge number of expenses, which could be tax deducted in every business form but KATA, then KATA is not also good option.  I actually save a lot money from being able to take tax deductions.

Thus.... It depends. Depends on one's business type and expenses. So one should not take the advice of anyone online about what is the best option. One should look into the best option (probably with a competent accountant) that matches their business needs. The best option may be KATA. Or it may not.....

ant75 wrote:

In KATA form you can hire an emloyee who has adequate degree.

Yes, you can. But many self employed people do not hire employees. And from the OP original post, he seems to be an artisan who does the work himself. So employees may not really be germane for him. It is good to try to make relevant comments to help the OP as much as possible.

Side note: Do you actually have a business in Hungary? And if so, do you hire employees? And if so, do you want to say you find that an easy (and simple) process in all its forms and paperwork?

klsallee wrote:

....

Oh... And as Fluffy already said, VAT is also a tax. Which hits hardest in Hungary, especially the poorer members of society.
....

Yes, exactly, the blanket VAT hits all and is a regressive tax.   

If you look at zero income tax countries, they usually get money from import duties instead and there's no avoiding them if say, you're living on an island as the government controls the ports of entry.  T

One of the things which is a reasonable idea is to give people a tax free allowance.  Then the lower paid are exempt from taxation and no longer have to deal with the tax authorities if they have simple affairs.   The question is where to set the limit. 

As for employees, I know of businesses (not in Hungary) who avoid employing people over a certain base to stop themselves becoming subject to the cost of a lot of social provisions.  Smaller businesses are sometimes exempt from these kinds of things depending on the country.   The cost of employment (for employers, of employing someone) can be swingeing.  Unintended consequences etc.