Changes to flat-rate taxation in 2023
The new year always brings updates to tax regulations. Changes to flat-rate taxation were introduced too, partly in line with the increase to the minimum wage, partly as independent measures to make this tax regime more favorable. Get an overview below.
About flat-rate taxation
Flat-rate taxation is a tax regime for freelancers where instead of precisely calculating your income, you can simply say that a certain per cent of your revenue should be considered your expenses. It is currently the most popular tax regime for freelancers after KATA became unavailable to most of those self-employed last year. Learn more about it here.
The new year brought some changes to flat-rate taxation too.
1. Quarterly reporting and tax payment
Up till the end of 2022, flat-rate taxpayers were supposed to report their income and pay their contributions monthly. This was most inconvenient to full-time freelancers who were supposed to pay minimum contributions even in months when they had no income.
Starting from 2023, contributions must be reported and paid only quarterly instead of monthly. This is supposed to even out the terrain for full-time freelancers who do not have income every month. This way they are not stuck paying minimum contributions in months without income and then paying regular contributions after larger assignments, but can divide their income equally between 3 months and pay contributions accordingly.
Minimum contributions still apply.
In line with this, reporting deadlines for 2023 are 12 April, July, October, and January 2024. You will need to look for form 2358 in ÁNYK or ONYA (the offline or online reporting apps), which will probably be the same as the 2258.
The 15% personal income tax also must be paid quarterly, same as before, by the above deadlines.
2. Minimum contributions increased
As of 1 January 2023, the minimum wage and the guaranteed minimum salary were increased by ca. 15%. This means changes to flat-rate taxation as well, since the minimum contributions are tied to these sums, and now they have increased too.
| Monthly minimum contribution 2023 | Minimum wage (no qualification) | Guaranteed minimum salary (at least high school diploma) |
| gross | HUF 232,000 | HUF 292,400 |
| Social security contribution (18.5%) | HUF 42,920 | HUF 54,094 |
| Social contribution tax (13%)* | HUF 33,930 | HUF 42,763.50 |
| Total | HUF 76,850 | HUF 96,857.50 |
*For the social contribution tax, the calculation base is at least the 112,5% of the minimum wage or the guaranteed minimum salary for the minimum contribution. If the tax base is higher than that, the simple 13% calculation applies.
The sum of the monthly minimum contribution continues to depend on your activity. If your activities require at least a high-school diploma, then you must pay a monthly minimum contribution based on the guaranteed minimum salary.
3. Tax exempt limit increased
For flat-rate taxpayers, every year the income that equals half of the yearly minimum wage is free of income tax. In 2022 this was HUF 1.2 million, or HUF 2 million in revenue for those using the 40% expense rate, which is the majority of flat-rate taxpayers.
In 2023, with the increase of the minimum wage, the tax exempt limit also increased. It is now HUF 1.392 million in income for everyone, which means HUF 2.32 million in revenue for those using the 40% expense rate.
4. Return to flat-rate taxation sooner
Until now, if you had been a flat-rate taxpayer before but then moved to another tax regime, you were allowed to choose flat-rate taxation again only after 4 years. The only exception was last September, when KATA taxpayers who could not file taxes anymore under KATA were allowed to choose flat-rate taxation instead.
Now the 4-year return time has been reduced to just 12 months.
Accounting with Helpers Finance
The changes to flat-rate taxation are in part due to the increase of the minimum wage, and in part to efforts to make this tax regime more favorable to freelancers with lower and more hectic incomes.
The Helpers Finance team specializes in working with foreigners moving to Hungary to start a business here. Our main focus is on providing accountancy to small and medium-sized businesses, but we also offer other related services such as company setup, and our clients include freelancers too.
Can we help you? Get in touch with us today.
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