In Hungary, individual entrepreneurs can choose from several taxation schemes: KATA, flat-rate tax, or personal entrepreneur income tax (VSZJA).
The VSZJA tax scheme is particularly suitable for those with high deductible expenses or who do not qualify for the more favorable schemes.
Under VSZJA tax, the entrepreneur pays tax on business income, and also needs to determine the portion withdrawn personally (entrepreneurial withdrawal).
Let’s break down the main elements
1. Entrepreneurial Withdrawal (2025)
The entrepreneurial withdrawal is the amount the entrepreneur takes from the business as personal income. It is not exactly the same as salary, but it is taxed similarly for personal income tax and social contributions.
Taxes and contributions on the withdrawal:
- 15% personal income tax (SZJA)
- 18.5% social security contribution (TB)
- 13% social contribution tax (SZOCHO) – calculated on minimum contribution base with a 1.125 multiplier
Minimum contribution (2025) – only mandatory for full-time entrepreneurs:
| Base | TB (18.5%) | SZOCHO (13% × 1.125) | Total |
| Minimum wage 290,800 HUF | 53,798 HUF | 42,528 HUF | 96,326 HUF |
| Guaranteed wage 348,800 HUF | 64,528 HUF | 50,958 HUF | 115,486 HUF |
The minimum contribution does not apply to part-time entrepreneurs (e.g., working full-time elsewhere, retirees, or on maternity/paternity leave). They pay contributions on their actual withdrawal.
2. Entrepreneurial Income and Dividend Taxes (2025)
The entrepreneurial profit (revenue – costs – depreciation – other adjustments) is taxed at 9% entrepreneurial income tax.
- Tax base: adjusted entrepreneurial profit
- Rate: 9%
Mandatory dividend taxation:
From the profit reduced by the 9% tax, a dividend base must be formed, subject to:
- 15% personal income tax (SZJA)
- 13% SZOCHO
This obligation applies even if the profit is not actually withdrawn.
SZOCHO cap 2025:
SZOCHO on the dividend base is capped at 24 times the minimum wage:
- Minimum wage 2025: 290,800 HUF
- Cap base: 290,800 × 24 = 6,979,200 HUF
- Maximum SZOCHO: 6,979,200 × 13% = 907,296 HUF
3. Reporting obligations in the VSZJA tax scheme
Entrepreneurs taxed under VSZJA tax regime have several reporting responsibilities:
- Monthly contribution and tax reporting (08 form to NAV) for withdrawals and other payments.
- Annual personal income tax return (53 form) – including entrepreneurial income tax, withdrawal SZJA, and dividend-related taxes.
- Local business tax – separate report to the local municipality (usually by May 31).
- VAT return, if the entrepreneur is VAT-registered.
4. Deductible costs
One advantage of VSZJA tax scheme is that business-related costs can be deducted if properly documented.
Examples of deductible expenses:
- materials and goods purchased,
- services used (e.g., accounting fee)
- travel expenses,
- professional courses, books, subscriptions,
- safety equipment and office supplies.
Deductible costs reduce the tax base, directly lowering the 9% entrepreneurial income tax. For high-cost entrepreneurs, VSZJA may be more favorable than flat-rate taxation.
Summary
VSZJA taxation is suitable for those who:
- have high, documented business expenses,
- do not qualify for KATA or flat-rate tax,
However, the administrative burden is higher, and careful planning is crucial. Assistance from an experienced accountant is strongly recommended.
