Similar to other types of taxes, the rules of the small business tax (KIVA) have also changed in recent years. The KIVA rate remains 10 percent in 2025, but there is an important update based on the tax package submitted in spring 2025 that KIVA taxpayers need to take into account.
Corporate restructuring in case of KIVA-taxpayers
One of the new measures affecting KIVA taxpayers, introduced in the autumn 2024 tax package, allows for a limited scope of restructuring for companies that opted for the small business tax regime.
Under the previous rules, entities under KIVA could not merge or demerge with another company — otherwise, they would lose eligibility for the preferential tax regime and would not be able to opt back in for two years. However, significant changes in the rules for re-electing KIVA status came into effect in 2024 and 2025.
As a main rule, KIVA status cannot be re-elected for two years from the date it ceases. This existing provision was supplemented in 2024 by a new exception: if KIVA status ends due to a merger or demerger at book value, the affected companies are allowed to opt back in. Although, between January and November 2024, this possibility was only available for such merger and demerger which do not qualify for preferential transformation, thereafter this limitation was cancelled.
For re-election, a notification must be submitted to the tax authority within 15 days following the effective date of the merger or demerger, provided that the conditions for re-establishing KIVA status are met. In this case, KIVA status resumes the day after the completion of the merger or demerger.
A further change took effect in summer 2025. According to the new rule, if KIVA status ceases due to a merger or demerger at book value and the taxpayer re-elects KIVA status within 15 days of the restructuring, it will not be required to determine the transitional tax base difference as at the merger/demerger date. This means that such restructurings can take place tax-neutrally.
Tax incentive for employing labour market entrants
As of 1 January 2025, the rules for the incentive available for employing individuals entering the labour market have changed. The benefit equals the employee’s gross monthly salary, but up to the amount of the minimum wage per month during the first year of employment, and up to 50 percent of the minimum wage per month for the following six months.
Before this amendment, the incentive could be applied for up to three years for labour-market entrants, while from 1 January 2025 this period has been reduced to 1 year and 6 months.
