RSM Hungary’s tax experts provide support in preparing for the transition to the small business tax regime (KIVA), comparing tax burden in case of KIVA and corporate income tax (CIT/TAO) regimes, and managing the related tax risks and administrative tasks.

Small Business Tax (KIVA) – why is it worth considering KIVA?

KIVA may be particularly advantageous for companies that:

  • operate with significant payroll costs,
  • do not distribute profits as dividends but reinvest them into development or growth,
  • are planning investments,
  • would like to optimize their tax burden and financial operations over the longer term.

Who may opt for KIVA taxation?

With the exception of public limited companies (Nyrt.), various types of corporate entities and foreign companies may also be eligible to choose the small business tax (KIVA), provided that they meet the statutory conditions.

  • Their average statistical headcount (employees) — calculated together with affiliated companies — is expected not to exceed 100 employees in the year of election.
  • Their revenue — calculated together with affiliated companies — is expected not to exceed HUF 6 billion in the year of election.
  • Their balance sheet total — on a standalone basis — is expected not to exceed HUF 6 billion in the year of election.
  • Their balance sheet date is 31 December, they do not have a controlled foreign company, and they keep their books in HUF.

Advantages of KIVA status

  • For KIVA taxpayers, instead of paying 13% social contribution tax on personnel expenses, only 10% KIVA is payable.
  • KIVA taxpayers who do not distribute their current-year profit as dividends, but instead typically use it for investments, enjoy a tax advantage compared to corporate income tax taxpayers, since they do not have to pay 9% corporate income tax on their profit.
  • KIVA taxpayers may also choose to determine their local business tax base as 120% of the KIVA base. If a KIVA taxpayer does not pay dividends — which are also part of the KIVA tax base — and does not have significant cost of goods sold or, for example, material costs within its total costs, this special method of determining the local business tax base may be particularly beneficial.

How can RSM’s KIVA advisory service help?

Our tax experts provide support both in preparing the decision on whether to choose KIVA and in the practical implementation of the transition.

Main elements of our service

  • KIVA eligibility review
    Through a tailored assessment, we determine whether your company meets the conditions for KIVA status.
  • CIT–KIVA comparison calculation
    Using customized calculations, we assess whether corporate income tax or KIVA may be the more favorable option for your company.
  • Planning the transition to KIVA
    We help map out the tax, accounting, and administrative steps related to the transition.
  • Identification of tax risks
    We identify the factors that may later lead to additional tax liabilities or other unfavorable consequences.
  • Handling of special issues
    We provide support in matters relating to affiliated companies, dividend payments, local business tax, investments, and switching back from KIVA.
  • KIVA compliance support
    We provide full-scope KIVA compliance services, including calculation, preparation and review of tax returns, and support during KIVA tax audits.

Why choose RSM’s KIVA advisory service?

RSM Hungary’s tax advisory team supports clients in analyzing complex tax situations, addressing structuring issues, and making informed business decisions. In many cases, choosing KIVA is not merely a technical tax matter, but a decision linked to the company’s operating model, growth plans, and ownership strategy. We support our clients in this process with tailored calculations, risk analysis, and practical solution proposals.

What should be considered before switching to KIVA?

Before switching to KIVA, not only the expected tax savings but also the longer-term operational and tax consequences should be examined.

Important considerations may include, among others:

  • dividend policy,
  • investment plans,
  • affiliated company structure,
  • incentives previously claimed,
  • the possibility of switching back to the corporate income tax regime in the future,
  • as well as the analysis of local business tax, transfer pricing, and accounting implications.

To make the right decision, a general calculation is not enough: the company’s operations, ownership background, and future plans must also be taken into account. The choice between KIVA and CIT is therefore typically an area where tailored tax advisory creates real business value.

When is it worth consulting an expert?

It is particularly worth seeking KIVA advisory if:

  • the company is in a growth phase,
  • the possibility of switching to KIVA has arisen,
  • it is unclear whether KIVA or CIT would be more favorable,
  • investment projects or dividend payment is being planned,
  • the company operates within a group or has affiliated company relationships,
  • future tax optimization and a predictable tax burden are important.

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