Self Employed Ed

Hello,

I have a question about being self employed in Hungary. I've read there's a special KATA tax which means you pay a lump sum of 50000 HUF every month. On top of that, no taxes or social contributions has to be paid. However, the upper boundary for KATA seems to be 6 million HUF a year. If you're under the KATA regime, and earn more than the said 6 million HUF, the exceeding part will have 40% percent tax rate (source). So, my question is, does it really work this way or are there any additional taxes or fees you have to pay?

Example:

- I make 10 million HUF a year being a full-time self-employed person in Hungary.
- I pay 0.6 million KATA tax (12 x 50000) for the first 6 million, netting 5.4 million from that lot.
- I pay 1.6 million (0.4 x 4 million) for the remaining 4 million, netting 2.4 million from that.

-> In the end, from the 10 million HUF I'll get 7.8 million after taxes and social contributions.

Are my calculation corrects? Does KATA work like this? Thanks for answering!

Anonymous4242

Unfortunately I don't have any information to help...


but I would like to encourage further discussion...(hope that doesn't violate forum rules)...


In September I will be registering as KATA self employed in order to work as an english teacher...


...but aside from some offers of help upon arrival from contacts in Budapest...have so far been unable to find much concrete information on the KATA system.


Anyone with insight who can help the OP or myself - please chime in!

Self Employed Ed

Indeed it seems to be hard to find information about this in English. However I have asked this same question. In a nutshell, it goes exactly as I asked, my calculations were correct. But you have to keep in mind that you pay KATA (50K HUF a month and 40% over the limit) from your revenue, not profit. So if your revenue is 12 million HUF but you have 5 million HUF expenses, you still pay KATA based on the 12 million HUF revenue, not 7 million. In other business types, like the KFT, it's different.

Pollypaprika

I am afraid I don't know enough, but this guide here seems pretty comprehensive

Taxation - Doing Business in Hungary | RSM DTM Hungary Tax and Financial Services Plc.

You do really need to find an accountant to assist you, perhaps not the answer you want to hear, but could save a lot of hassle in the long run.

Good luck!

Peter_in_Hungary

You MUST have an accountant. You will not be able to manage the bureaucracy without one. Your challenge will be finding one that speaks English and does not charge a fortune. Our accountant charges 40 000fts / qtr. It would be more if we were VAT registered. Avoid the need VAT for registration if you can (AFA here) if you can!!

Anonymous4242

I can see that the absolute need for an accountant is definitely true...


I have sent out some e-mails to (ostensibly) english speaking accountants...but have yet to receive any replies (been waiting for over 2 weeks now).


I tried Ecovis Accounting,
and
Bilance Tax & Accounting.


Anyone have suggestions for others?

Considering there seems to be quite a few english teachers in Hungary, and even more self-employed small businesses....I am surprised there is not a well-trodden route to follow...

PaulinEger

I've been in the KATA system for nearly 2 years and my wife more than 3. We each earn under the 6m huf limit. We don't use an accountant but a firm of bookkeepers who charge us each 5000 huf per month.
On top of the 50,000 per month we also have to pay a local tax of 2% of our earnings each year. As far as I know this goes to our local authority so be aware that there might be other charges to pay depending on where you live. The up side for me is that I can hop out of KATA for a short time if I'm not working, for example during the summer when the schools are closed. This saves me the 50,000 per month but I still have to pay around 7,000 for health insurance. Obviously, during this time I can work or give an invoice.

Peter_in_Hungary

Do I detect a typo - and should 'can' read can't

Anonymous4242

To both Peter and Paul~

Just to let you know that I sent you both PMs~

Just requesting info about your accountants/bookkeepers~

Please drop me a message if you get a moment. ^^

PaulinEger

oops

Austen Haines

Hi everyone,
and I'm sorry for bringing this up again. I SHOULD be starting work next Monday on a self employed basis. I wish to register (KATA) but cant even work out what or where i have to go.
I have sent off some emails to various government groups but no replies just yet.

I am not intending to work very much (less than 20 hours a week) , and so i THINK that means i will only have to pay half of the 50k??

Anyhow anyone that can point me in the right direction for the application forms/process would be great.

Thank you

PaulinEger

Regardless of how many hours you work you will still have to pay 50,000 huf

tweez78

Hi all, sorry to deviate the thread slightly but could do with some help/opinions/actual hard facts regarding income tax. I did search the forums and there's some related threads that are closed thus i'm unable to reply/resurrect.

Anyway, my situation is slightly different to the OP in that I am employed at a UK company and they allowed me work remotely from Hungary. None of the work I do relates to Hungary and I'm paid via PAYE into my UK bank account as I always have been. I know I'm obligated to pay income tax on 'worldwide income' whilst being here so I've been taking steps to arrange that and employed a tax adviser and have also made HMRC aware of my situation and have recently stopped paying income tax in the UK. (although continue to pay NI). Following signing of various forms via my adviser, I am now in receipt of an official Hungarian tax card/number.

My issue, which is causing me much worry, is that my adviser says that my EMPLOYERS also have to pay tax (27% and 1.5%) and that they should deduct my Hungarian tax at source when I'm paid and pay the tax authority.... ?? Is this even possible with the UK PAYE model? And surely if my UK employers conduct no business here why would they be obliged to pay tax? She also wants to charge a registration fee and monthly fee to my employers eventhough I've told her I would pay this! (I should be clear it was at my request to work from Hungary; my employers didn't send me)

This site which someone posted previously ( Taxation - Doing Business in Hungary | RSM DTM Hungary Tax and Financial Services Plc. ) states in the first few lines "While taxpayers with Hungarian residence have tax-paying obligations for their income originating both from Hungary and from abroad, non-resident businesses are only taxable on activities conducted at their Hungarian branches." The wording on the Hungarian NTAC is not so clear.

As it happens my employers are a worldwide brand and there is a branch here in Hungary although the nature of the work is different to what both I and the UK branch that I work for do. I would consider my UK branch as "non-resident".

I think (perhaps naively) that I'd employ a tax adviser and use their services to simply pay my income tax direct to the tax authority each month or quarter or whatever on a kind of private individual basis. But she's not having it!

I'm hoping there is someone in a similar position to me that has gone through this too and can offer some help on the subject!

The bottom line is my company were good enough to let me work here but they're not going to pay extra taxes/costs on top of my salary... why would they?

Peter_in_Hungary

Hi tweez78
You ask for opinions and facts
Well my opinion is that where you are resident makes a difference in conjunction with where the work is done.
For the FACTS read

https://www.gov.uk/government/upload...tr-hungary.pdf

Its only about 26 pages and your interest starts about Article 14 (The document is a taxation agreement between UK and Hungary 2011)

I don't think this covers NI, that I believe is down to residency status. (back to opinions)

rickster000

some info relating to your queries here:

Budapest Inc | Setting Up as Self-Employed in Hungary