Tax department

Lump-sum tax on registered revenue without deductible costs

Lump-sum tax on registered revenue is a possibility to apply a different, simplified form of taxation – other than the general one – to some categories of revenue earned by physical persons. In practice, it usually concerns those entrepreneurs who do not incur significant tax deductible expenses. It allows them to apply low tax rates or exempt themselves from the obligation of maintaining full bookkeeping.

As the very name suggests, the lump-sum tax on registered revenue, does not concern to the “take-home” income, but to the total revenue earned by physical person. Such revenue may be reduced only by the health insurance contribution. The lump-sum tax may be chosen by new entrepreneurs as well as by those who are already running business, though with certain limitations for the latter.

First of all, the lump-sum tax on registered revenue cannot be chosen by entrepreneurs who obtained the revenue exceeding amount of 150 thousand Euro in the previous year. Secondly, the business activity must belong to one of the following categories: non-agricultural business activity, revenue from lease or sublease, tenancy or subtenancy
However, the lump-sum tax on registered revenue cannot be applied to business such as: pharmacies, pawnshops or foreign currency exchange.

Those who decide to apply the lump-sum form of taxation cannot take advantage of the pro-family tax relief nor joint taxation of spouses. However, they still may be the beneficiary of rehabilitation, medication or donation related tax deductions. All these limitations are compensated by remarkably lower lump-sum tax rates – 3%, 5,5%, 8,5%, 17% or 20% – depending on the kind of the business activity.

CGO Legal law firm provides services to those who already run a business and would like to switch to lump-sum form of taxation as well as those who are willing to start business activity.

To learn more please contact us.