KATA or KFT for a freelance English teacher?

Member since 04 August 2013

franklinatseaNew member21 August 2015 19:32:18

Which option is better for English teachers in Hungary?聽聽I don`t expect a high income, of course, especially at first.聽 I am just not familiar with the pros and cons.

Thank you for your advice.

GuestPoster279 Guest

GuestPoster279Guest22 August 2015 08:30:57

1) If you have a KFT you are an employee. Your employee income taxes are listed here:

/forum/viewtopic.php?id=506728

And the KFT has to make another 18% employer contribution for your social insurances and retirement. Total personal and company taxes for each employee (i.e. you) is about 52% of your income. And the KFT has to pay you a minimum wage (i.e. you can not just pay yourself 1 Forint). And any additional revenue from the company has a 10% company tax, and if paid out to you then is also taxed as income. And you have to put in 3 Million Forint into the KFT (can be done at company formation or over a few years) before you can withdraw any dividends.

2) There is a special entrepreneurial flat tax of about 35% on income (i.e. you can decrease this tax by writing off expenses from revenue).

3) And KATA which is a flat monthly payment (not a percentage) with a maximum revenue of 5 Million Forint. You can not write off any expenses.

Which of the above is best will require you doing the math given your expected income and expenses.

franklinatsea New member

Member since 04 August 2013

franklinatseaNew member22 August 2015 18:06:24

Thank you for your detailed reply!聽聽I appreciate that.聽

Are there any EFL teachers in the forum who could comment on their own observations, given the typical earnings of freelance teachers there?