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If a business with small tax status (KATA) is unable to pay its itemized lump sum tax due to the current situation, will it be subject to dissolution based on overdue tax debts exceeding HUF 100 thousand?
As a basic principle, the business ceases to be taxable under this tax regimen if its net tax debt recorded at the national tax and customs authority exceeds HUF 100 000 on the last day of the calendar year. The tax authority notifies the business of its loss of taxability status in a written decision. If the business subject to KATA lump sum tax pays its overdue tax debt prior to the written decision having becoming final, its status as a taxable entity shall not be terminated and the business may continue to be taxed according to the itemized lump sum tax.
In light of the state of emergency brought about by the coronavirus pandemic, businesses subject to small taxpayers’ itemized lump sum tax (KATA) which pursue any of the following exempt activities, shall be released from their KATA obligations for the months of March, April, May and June 2020:
The pre-condition of exemption is that the business subject to small taxpayers’ itemized lump sum tax [KATA] was already subject to KATA in the month of February, 2020.
Furthermore, due to the state of emergency, small taxpayer businesses may repay their tax debts which had accumulated and fallen due prior to 1 March, 2020 in 10 equal monthly instalments, starting from the month following the calendar quarter in which the state of emergency is lifted - with the monthly instalments falling due on the 12th day of each month. The national tax authority shall not charge a default penalty for such tax debts from 1 March, 2020 until the month following the calendar quarter in which the state of emergency is lifted, and for the duration of the instalments.
A default on its instalments shall result in the taxpayer losing the concessions stipulated above in this article and all of its debts shall become due in one lump sum. In such cases, the tax authority shall charge a default penalty on the remaining debt from 1 March, 2020, in addition to the default penalty charged for the period up to 1 March, 2020.
Source: National Tax and Customs Administration (NAV)
In light of the state of emergency brought about by the coronavirus pandemic, businesses subject to small taxpayers’ itemized lump sum tax (KATA) which pursue any of the following exempt activities, shall be released from their KATA obligations for the months of March, April, May and June 2020:
1. Taxi operation (TEÁOR [NACE] and TESZOR 4932),
2. Hairdressing and other beauty treatment (TEÁOR [NACE] and TESZOR 9602),
3. Painting and glass installation (TEÁOR [NACE] and TESZOR 4334 ),
4. Other (miscellaneous) human health activities (TEÁOR [NACE] and TESZOR 8690),
5. Electrical installation (TEÁOR [NACE] and TESZOR 4321),
6. Activities for the promotion of physical well-being (TEÁOR [NACE] and TESZOR 9604),
7. Performing arts (TEÁOR [NACE] and TESZOR 9001),
8. Plumbing, heat and air-conditioning installation (TEÁOR [NACE] and TESZOR 4322),
9. Specialist ambulatory medical services (TEÁOR [NACE] and TESZOR 8622),
10. Structural carpentry (TEÁOR [NACE] and TESZOR 4332),
11. Sports and recreation education (TEÁOR [NACE] and TESZOR 8551),
12. Roofing activities (TEÁOR [NACE] and TESZOR 4391),
13. General ambulatory medical services (TEÁOR [NACE] and TESZOR 8621),
14. Floor and wall covering (TEÁOR [NACE] and TESZOR 4333),
15. Ambulatory dental services (TEÁOR [NACE] and TESZOR 8623),
16. Support services to the performing arts (TEÁOR [NACE] and TESZOR 9002),
17. Other (miscellaneous) sports activities (TEÁOR [NACE] and TESZOR 9319),
18. In hospital patient care (TEÁOR [NACE] and TESZOR 8610),
19. Organization of conventions and trade shows (TEÁOR [NACE] and TESZOR 8230),
20. Holiday and other short-stay accommodation (TEÁOR [NACE] and TESZOR 5520),
21. Fitness facilities (TEÁOR [NACE] and TESZOR 9313),
22. Other (miscellaneous) food services (TEÁOR [NACE] and TESZOR 5629),
23. Other (miscellaneous) accommodation (TEÁOR [NACE] and TESZOR 5590),
24. Gambling and betting activities (TEÁOR [NACE] and TESZOR 9200),
25. Daytime social work services (without accommodation for the elderly and disabled) (TEÁOR [NACE] and TESZOR 8810),
26. Hotels and similar accommodation (TEÁOR [NACE] and TESZOR 5510),
2. Hairdressing and other beauty treatment (TEÁOR [NACE] and TESZOR 9602),
3. Painting and glass installation (TEÁOR [NACE] and TESZOR 4334 ),
4. Other (miscellaneous) human health activities (TEÁOR [NACE] and TESZOR 8690),
5. Electrical installation (TEÁOR [NACE] and TESZOR 4321),
6. Activities for the promotion of physical well-being (TEÁOR [NACE] and TESZOR 9604),
7. Performing arts (TEÁOR [NACE] and TESZOR 9001),
8. Plumbing, heat and air-conditioning installation (TEÁOR [NACE] and TESZOR 4322),
9. Specialist ambulatory medical services (TEÁOR [NACE] and TESZOR 8622),
10. Structural carpentry (TEÁOR [NACE] and TESZOR 4332),
11. Sports and recreation education (TEÁOR [NACE] and TESZOR 8551),
12. Roofing activities (TEÁOR [NACE] and TESZOR 4391),
13. General ambulatory medical services (TEÁOR [NACE] and TESZOR 8621),
14. Floor and wall covering (TEÁOR [NACE] and TESZOR 4333),
15. Ambulatory dental services (TEÁOR [NACE] and TESZOR 8623),
16. Support services to the performing arts (TEÁOR [NACE] and TESZOR 9002),
17. Other (miscellaneous) sports activities (TEÁOR [NACE] and TESZOR 9319),
18. In hospital patient care (TEÁOR [NACE] and TESZOR 8610),
19. Organization of conventions and trade shows (TEÁOR [NACE] and TESZOR 8230),
20. Holiday and other short-stay accommodation (TEÁOR [NACE] and TESZOR 5520),
21. Fitness facilities (TEÁOR [NACE] and TESZOR 9313),
22. Other (miscellaneous) food services (TEÁOR [NACE] and TESZOR 5629),
23. Other (miscellaneous) accommodation (TEÁOR [NACE] and TESZOR 5590),
24. Gambling and betting activities (TEÁOR [NACE] and TESZOR 9200),
25. Daytime social work services (without accommodation for the elderly and disabled) (TEÁOR [NACE] and TESZOR 8810),
26. Hotels and similar accommodation (TEÁOR [NACE] and TESZOR 5510),
The pre-condition of exemption is that the business subject to small taxpayers’ itemized lump sum tax [KATA] was already subject to KATA in the month of February, 2020.
Furthermore, due to the state of emergency, small taxpayer businesses may repay their tax debts which had accumulated and fallen due prior to 1 March, 2020 in 10 equal monthly instalments, starting from the month following the calendar quarter in which the state of emergency is lifted - with the monthly instalments falling due on the 12th day of each month. The national tax authority shall not charge a default penalty for such tax debts from 1 March, 2020 until the month following the calendar quarter in which the state of emergency is lifted, and for the duration of the instalments.
A default on its instalments shall result in the taxpayer losing the concessions stipulated above in this article and all of its debts shall become due in one lump sum. In such cases, the tax authority shall charge a default penalty on the remaining debt from 1 March, 2020, in addition to the default penalty charged for the period up to 1 March, 2020.
Source: National Tax and Customs Administration (NAV)