KATA 2027 in Hungary: Proposed New Rules and Key Changes
The proposed KATA rules for 2027 could significantly expand the range of entrepreneurs who may choose this simplified Hungarian tax regime. What would change compared with the current system?
Important: This article is based on the draft legislation published for public consultation on 6 October 2026. The proposed KATA 2027 rules are not yet in force and may still change before the legislation is adopted.
The Hungarian Government has proposed significant changes to the KATA (itemised tax for small taxpayers) regime from 2027.
If adopted in its current form, the new rules would once again make KATA available to a much wider group of sole entrepreneurs. In particular, certain part-time entrepreneurs, pensioners and university students could become eligible, while KATA taxpayers could once again invoice companies and other organisations.
The proposal would also increase the annual KATA revenue threshold from HUF 18 million to HUF 22 million.
For entrepreneurs considering starting or restructuring their business in Hungary, these proposed changes could therefore be highly relevant.
What could change under KATA 2027?
The proposed KATA 2027 system would introduce several important changes:
the monthly KATA payment for full-time entrepreneurs would be HUF 100,000;
non-full-time KATA taxpayers would pay HUF 50,000 per month;
the annual KATA revenue threshold would increase to HUF 22 million;
KATA taxpayers could once again invoice companies and other organisations;
part-time entrepreneurs, pensioners and full-time students could become eligible;
a special 15% additional tax would apply to certain revenues received from companies and organisations.
The proposal is intended to make KATA available to a broader range of small businesses while maintaining a relatively simple tax structure. https://kormany.hu
KATA 2027: HUF 100,000 monthly tax for full-time entrepreneurs
Under the proposal, the standard KATA payment for a full-time sole entrepreneur would be HUF 100,000 per month.
For non-full-time KATA taxpayers, the proposed monthly amount would be HUF 50,000.
However, transitional rules would apply to certain entrepreneurs who are already using KATA at the end of 2026. In particular, entrepreneurs who invoice exclusively private individuals would pay a reduced HUF 75,000 per month in 2027, with the monthly payment increasing to HUF 100,000 from 2028.
These transitional rules are particularly relevant for existing KATA taxpayers and should be considered when assessing the potential impact of the proposed 2027 changes.
Could KATA taxpayers invoice companies again?
This is one of the most significant proposed changes.
Under the current KATA system, the ability of a KATA taxpayer to invoice companies is heavily restricted.
The proposed 2027 rules would change this approach.
If the legislation is adopted, KATA taxpayers could once again receive income from companies and other organisations, not only from private individuals.
This could make KATA considerably more attractive for freelancers and small service providers working with businesses.
However, the proposed system would introduce additional taxation for certain company-related revenues.
The proposed 15% additional tax on business revenues
According to the proposal, revenues received from companies and other organisations would be subject to a 15% additional tax.
Importantly, the KATA already paid by the entrepreneur would be taken into account when calculating this additional tax.
This means that the practical tax burden would depend on the amount and structure of the entrepreneur's business revenue.
For example, based on the proposed rules, a full-time KATA taxpayer could receive up to approximately HUF 8 million of company revenue per year without paying more than the basic annual KATA amount, because the KATA payments would be credited against the additional tax obligation. https://kormany.hu
The exact application of these rules should, however, be reviewed carefully once the final legislation is adopted.
The annual KATA threshold could increase to HUF 22 million
Another important proposal is the increase of the annual KATA revenue threshold.
The current threshold is HUF 18 million.
Under the proposed KATA 2027 rules, this would increase to:
HUF 22 million per year
Revenue above the applicable KATA threshold would continue to be subject to the relevant additional tax.
The increase could make KATA more attractive for entrepreneurs whose annual turnover has outgrown the current HUF 18 million limit but who still operate on a relatively small scale.
Who could choose KATA under the proposed 2027 rules?
The proposal would significantly broaden eligibility.
Among others, KATA could once again become available to:
full-time sole entrepreneurs;
entrepreneurs working alongside employment;
pensioners;
full-time university students;
other sole entrepreneurs who meet the statutory conditions.
This would represent a significant change compared with the current system.
For someone operating a small business in Hungary alongside employment or studies, the proposed rules could therefore be particularly relevant.
What about entrepreneurs who are already using KATA?
The proposal includes transitional provisions for entrepreneurs who are KATA taxpayers on 31 December 2026.
According to the proposal, existing taxpayers could remain under the current KATA regime during a transitional period, subject to specific conditions.
The proposed transitional amounts include:
Year | Proposed monthly KATA | Revenue threshold |
2027 | HUF 75,000 | HUF 18 million |
2028 | HUF 100,000 | HUF 18 million |
2029 | New KATA rules | HUF 22 million |
These transitional rules apply to entrepreneurs who meet the relevant conditions and remain under the transitional KATA regime. The new KATA rules would apply separately to those entering the new regime.
KATA 2027 and VAT are separate questions
It is important not to confuse the KATA revenue threshold with the VAT exemption threshold.
KATA and VAT are governed by separate rules. Choosing KATA does not automatically determine whether an entrepreneur must charge VAT.
The KATA revenue threshold and the Hungarian VAT exemption threshold are therefore separate legal limits. Under the current rules, the VAT exemption threshold is also expected to reach HUF 22 million in 2027.
Entrepreneurs should therefore assess their KATA status and VAT position separately before choosing their tax regime.
What could KATA 2027 mean for entrepreneurs?
If the proposal becomes law in its current form, KATA could once again become an attractive option for a broader range of small entrepreneurs in Hungary.
The proposed system could be particularly relevant for:
freelancers;
consultants;
small service providers;
entrepreneurs working for both private individuals and companies;
part-time entrepreneurs;
pensioners carrying out business activities;
university students running a small business.
For businesses with significant corporate clients, however, the proposed 15% additional tax and the detailed rules concerning company revenues will need to be considered carefully.
The most suitable tax regime will therefore depend not only on turnover, but also on the type of customers, the entrepreneur's employment status and the structure of the business.
What should entrepreneurs do now?
At this stage, it would be premature to change the tax status of a business solely on the basis of the proposed legislation.
The KATA 2027 rules are still under discussion and may change before the legislation is adopted. The current public consultation is scheduled to run until 14 October 2026.
Entrepreneurs should therefore:
monitor the final legislation;
review their expected 2027 revenue;
analyse how much revenue comes from private individuals and companies;
check their employment or pension status;
compare KATA with other available Hungarian tax regimes; and
seek professional advice before making a final decision.
Professional advice on KATA and Hungarian tax law
The proposed KATA 2027 changes could create new opportunities for many small entrepreneurs, but the right tax structure depends on the individual circumstances of each business.
If you are starting a business in Hungary, already operating as a sole entrepreneur, or considering changing your tax regime, professional advice can help you assess the potential consequences of the new rules.
Do you have questions about KATA 2027 or the proposed Hungarian tax changes?
The Major Gábor Law Office provides legal and tax-related assistance to Hungarian and foreign businesses, including advice on Hungarian tax rules and NAV matters.
Request a consultation to discuss how the proposed KATA 2027 rules could affect your business.
Request a consultation to discuss how the proposed KATA 2027 rules could affect your business.
