New tax rules to chase away Hungarian tourist guides?

On Tuesday, the Hungarian parliament accepted the government’s modifications to the common compact enterprise tax (KATA) in Hungary. As a outcome, KATA payers, with the exception of taxi motorists, will be equipped to crank out revenues by carrying out company only with personal people today and Hungarian citizens. Experts say that quite a few vacationer guides will disappear from the tourism sector since they will have to pay significantly better taxes since of the modifications. Down below you can read through the information.

Hundreds of hundreds of families in issues in Hungary

According to, the new guidelines of KATA trigger challenges in the Hungarian tourism sector. That is due to the fact, from September, it will only be rewarding for self-employed persons doing work total-time in their business enterprise and providing expert services or selling products and solutions to people. They will have to spend a flat tax of HUF 50,000 (EUR 122) for each thirty day period if their yearly revenues do not exceed HUF 18,000,000 (EUR 43,932.26). Nevertheless, most of the recent KATA payers do not drop into that class. They generate revenues by collaborating with businesses and institutions or they only get the job done element-time in their enterprise. Tourist guides and Airbnb owners are fantastic examples of that.

Based mostly on the calculations of, the modifications impact at the very least 2/3rd of the about 450,000 KATA payers. A little company will drop EUR 106.63 for each thirty day period if its annually revenue does not access HUF 3,000,000 (EUR 7,332). That loss rises to EUR 143.29 per month if the annual profits is HUF 5,000,000 (12,221 EUR). The loss is respectively EUR 180 and EUR 452 for every month if the compact small business reaches the HUF 7,000,000 and 12,000,000 thresholds (EUR 17,019 and 30,000). These are significant losses if you take into account that the median average profits in Hungary is down below EUR 1,000 for every thirty day period.

What’s more, the original tax scheme was so simple that nobody desired to employ the service of an accountant. Administering other tax methods is a great deal much more challenging. Consequently, most men and women will want the help of a skilled. That will insert EUR 50 to the fees of the previous KATA payers, each month.

Coup de grâce to a lot of vacationer guides

In the tourism sector, vacationer guides, waiters and chefs selected KATA. Judit Deák, the chairwoman of the Federation of Hungarian Tourist Guides, claimed that the problem was not as grave as it seemed. They hope that the governing administration will improve the appropriate restrictions as took place throughout the pandemic when the administration in the beginning excluded vacationer guides from quite a few allowances. However, they finally modified appropriate decrees upon getting numerous grievances from individuals functioning in that sector.

Mrs Deák highlighted that tourist guides create revenues by working with vacation businesses that understandably are not non-public people today. Moreover, most tourist guides work with multiple vacation companies. She additional that, presented the authorities does not modify the new policies,

numerous will keep on their operate illegally, which indicates the state will shed a sizeable sum of tax cash.

An additional consequence could be that vacationer guides will have to elevate their price ranges. In that scenario, less businesses will pick out their solutions because they will not have the price range. And so, the circle closes. 10-20 per cent of the tourist guides still left the sector due to the fact of the pandemic. That rate could possibly enhance since of the new KATA procedures.

As we noted,

protests broke out on Tuesday because of the KATA modifications.

Demonstrators gathered on Kossuth Sq., near the parliament. The crowd later marched to Margaret Bridge and blocked the website traffic there. At noon, they did the same on the Elizabeth Bridge. Ruling Fidesz and KDNP MPs did not care: they voted for the new guidelines 120 to 58. You can examine our report on the Tuesday protest and glimpse at the pictures on THIS link.

The government stated the new principles would remedy the difficulty of “hidden employment” as the preferential tax would be restricted to business people selling their merchandise or providing their products and services to people. KATA payers, with the exception of taxi drivers, will, consequently, make revenues by undertaking business with non-public persons and Hungarian citizens only. The new rules are to acquire effect on 1 September, when taxpayers will have time until finally 25 September to indicate regardless of whether they would like to remain with the modified technique or prefer other types of taxation.