The Government’s goal was to make the administration easier with the new regulations but there are still a couple of obligations left that need to be noticed.
QUARTERLY REPORTING OBLIGATION
Fortunately, from the point of view of tax payment, flat-rate taxation has not become less favorable, in fact, the monthly declaration obligation has been changed to a quarterly period. This means taxes need to be declared after each 3 months and the first payment should be made by 12th April.
This is a good relief for taxpayers since the monthly administration is reduced. However, it is still obligatory to sum-up all the entrepreneur’s income and declare the calculated taxes towards the tax authorities.
Note: This regulation does not have any affects on VAT and Employee related obligations, therefore, if the business is subject to VAT, doing international transactions or employs individuals, etc. then monthly reports might need to be submitted!
NEW CALCULATION METHOD
From January a new, moving average based tax calculation method is going to be applied. This calculation aims to balance out the full time entrepreneurs’ uneven taxation due to minimum contributions.
We have to compare the rolled income subject to SZJA with the TB/Szocho fund paid in the previous quarters. then the amount determined in this way must be divided by the number of months in which the individual entrepreneur was insured in the relevant quarter.
According to the previous rules, due to the unequal distribution of the monthly taxable income, it may happen that for the same income, a different tax liability arises for the whole year. According to this, the distribution of income will have less influence on the amount of the pending social contributions.
LIMITS AND MINIMUM TAXES
It’s may already known that the Government has accepted the proposal of increasing the minimum wage from 200,000 huf to 232,000 huf from January 2023. The educated minimum salary has been also increased from 260,000 huf to 296,400 huf. This means the minimum taxes (social contributions) and the tax-free limit will be raised as well since these are linked to the minimum wage.
Tax-free limit: From January, 2,320,000 huf will be the tax free limit, which means as long as you don’t reach this limit you don’t have to pay the regular taxes. In case you are a full-time entrepreneur, you have to pay the minimum taxes only. The tax above the tax-free limit has not changed.
Minimum taxes: Currently 66,250 huf monthly social contributions will be changed to 76,850 huf. The educated minimum tax will be also increased to 98,180 huf from January.
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