Proposed Changes to Hungary’s KATA Regime from 2027

The planned reform would expand eligibility, restore corporate invoicing and improve the social security position of full-time small taxpayers.

The Hungarian Government has proposed a substantial revision of the itemised tax for small taxpayers (KATA) from 2027. The draft would reopen the regime to pensioners, university students and part-time entrepreneurs. The fixed monthly tax would be HUF 100,000 for full-time taxpayers and HUF 50,000 for part-time taxpayers, while the annual revenue ceiling would increase from HUF 18 million to HUF 22 million.

Corporate invoicing and anti-avoidance safeguards

KATA taxpayers would again be permitted to invoice companies and other organisations. Revenue from such payers would be subject to a 15% tax, with the fixed KATA payments credited against this liability. For a full-time taxpayer operating throughout the year, an additional payment would therefore arise only if annual corporate-source revenue exceeds HUF 8 million. However, if at least half of annual revenue is received from the same payer or related persons, KATA status would cease at the end of that year. This restriction is intended to prevent disguised employment arrangements.

Transitional rules and social security effects

The existing and revised regimes would operate in parallel in 2027 and 2028. Taxpayers already subject to the current KATA rules at the end of 2026 could remain in that system temporarily, paying HUF 75,000 per month in 2027 and HUF 100,000 per month in 2028. The current regime would end in 2029, while the fixed tax under the new system would be linked to the statutory minimum wage from 2028.

For full-time taxpayers opting into the new KATA, the monthly social security benefit base would rise to HUF 317,000 in 2027 and would equal the applicable minimum wage from 2028. This would increase the basis for sickness, maternity and pension benefits and should eliminate the current proportional reduction applied when calculating pension amounts. Part-time KATA taxpayers would continue not to acquire insured status solely through KATA. Overall, the reform would broaden access to the simplified tax regime and improve social security coverage, while imposing higher fixed payments and stricter safeguards on dependence on a single corporate client.