Like many other companies, we were caught off guard in the early days of July 2022, when the government announced the modification of KATA (Fixed-rate Tax of Small Taxpayer Enterprises and Small Company Tax), which had been in place since 2013, stating that from 1 September, this tax regime will be available in a different form, for a considerably smaller group of society.
When this news was announced, we were worried for the following few weeks, as most of our Hungarian translators had been working for us using this form of taxation, which they could no longer maintain after the change in the KATA tax regime. Fearing that we would lose our subcontractors, our first move was to inform each of them individually that we supported them, knowing how difficult a decision they had to make. We assured them that we would still like to continue working with them, and offered to help them if they had any questions.
In the meantime, we had also been looking for the best solution for our subcontractors within our company. Our colleagues working in finance were in constant contact with our company accountant to discuss the various options. We advised our translators to do the same: seek individual suggestions from a tax professional.
For our part, we let our subcontractors invoice for all the work they had done in August until 31 August, thus ensuring that we met the KATA tax deadline.
By the end of August, we had a clearer idea of our options with our subcontractors after consulting with accounting and taxing experts. We were delighted that the majority of them decided to continue translating with us. Indeed, 95% of our subcontractors changed their business and tax form, allowing us to continue working with them. Unfortunately, some of our subcontractors have left the industry or decided to continue their careers as employees.
We would like to thank our remaining subcontractors for their unwavering trust and loyalty, and we wish all the best to those we had to say goodbye to unintentionally.