KATA is a simplified tax scheme specifically available for full-time individual entrepreneurs who provide services or sell products exclusively to private individuals.
The main advantage of this simplified tax scheme is its simple administration and fixed monthly tax, but certain revenue limits and rules must be observed.
Let’s take a look at the limits and rules for 2025.
1. Monthly KATA Tax and Revenue Limit
- Monthly tax: 50,000 HUF
- Annual revenue limit: 18,000,000 HUF (pro-rata for partial-year operation)
If the annual revenue exceeds 18 million HUF, a 40% additional tax is payable on the excess.
Important restrictions:
- This tax scheme is only available for full-time entrepreneurs.
- It applies only to services provided or products sold to private individuals; invoicing companies removes the entrepreneur from KATA taxation.
2. Reporting and Record-Keeping Obligations
KATA taxpayers must maintain the following records and submit the following reports:
- Continuous revenue records
- Annual KATA return to NAV – reporting the annual revenue and any additional tax by February 25.
- Annual Local business tax – submitted to the municipality by May 31.
- VAT return, if the entrepreneur is VAT-registered (monthly, quarterly, or annual).
3. Example Calculation
Eva is a full-time entrepreneur who provides services to individuals only, therefore, she selected the KATA tax scheme and pays 50,000 HUF tax every month. Her annual revenue is 20,000,000 HUF. Let’s see her tax breakdown.
| Item | Amount (HUF) |
| Annual revenue | 20,000,000 |
| Monthly tax (50,000 HUF x 12 months) | 600,000 |
| Revenue above 18 million HUF | 20,000,000 – 18,000,000 = 2,000,000 |
| 40% additional tax on excess | 2,000,000 × 40% = 800,000 |
| Total tax payable | 600,000 + 800,000 = 1,400,000 |
*In this article, for the sake of simplicity, we focus only on the KATA tax calculation, but with such revenue, VAT obligations may also arise.
Notes:
- The 50,000 HUF monthly tax is the base KATA fee and is fixed every month.
- The annual revenue limit is 18 million HUF; any revenue above this incurs a 40% additional tax.
- The total KATA tax payable is therefore 1,400,000 HUF for an annual revenue of 20 million HUF.
- VAT is not considered in this simplified example.
4. Who Benefits from this tax scheme?
KATA is mainly advantageous for entrepreneurs who:
- work full-time as an entrepreneur,
- sell services or products to private individuals,
- have annual revenue not exceeding or not significantly exceeding 18 million HUF,
- want simplified administration with a fixed monthly tax.
