Switch to small business tax from 2026: make a decision on the KIVA transition at the end of 2025

KIVA (small business tax) Transition Opportunity Starting January 1, 2026

Small companies (in terms of both staff and financial data) should consider which taxation method is most advantageous. One option is transitioning from corporate tax to the small business tax (KIVA). While KIVA can be chosen at any time during the year, for administrative reasons, year-end transition may be preferable.

KIVA status begins on the first day of the month following notification, and the corporate tax rules apply until that date. If a company wishes to be under KIVA from January 1, 2026, notification must be submitted by December 2025. The transition date marks the start of a new fiscal year, for which accounting statements and tax returns must be prepared. Proper timing reduces administrative burden and avoids duplicating closing tasks.

LeitnerLeitner’s tax experts provide skilled assistance in matters related to the transition to KIVA and KIVA taxation.

Who Benefits from KIVA in 2026?

KIVA is a simplified tax that replaces corporate tax, social contribution tax, and simplifies local business tax. The tax rate is 10%, based on personal payments adjusted by capital and dividend operations, with some modifications. The advantage is that profits and wages are taxed at the same rate, encouraging employment and wage increases.

KIVA is recommended for businesses where personal payments exceed profits, or where profit reinvestment or capital injection is planned for significant development projects.

KIVA taxation has conditions, so individualized calculations are necessary. LeitnerLeitner tax experts provide comprehensive support for KIVA transition and related tax matters.

KIVA conditions:

• the average statistical headcount does not exceed 50 persons (including affiliated companies),
• the revenue (including affiliated companies) and balance sheet total do not exceed HUF 3 billion, calculated on an annual basis,
• the company is a calendar year taxpayer whose tax number has not been permanently (legally) deleted by the National Tax and Customs Administration (NAV) in the two calendar years preceding the tax year.
• it does not have a controlled foreign company.

GLOSSARY

• KIVA (small business tax)
  KIVA is a simplified form of business taxation that replaces corporate tax and social security contributions. The tax rate is 10%, and the tax base is the balance of personal payments and capital movements. Its advantage is that it encourages employment and wage increases while reducing administration.
• KIVA transition
  The process by which a company transitions from corporate tax (TAO) to KIVA. The notification must be made to the NAV, and the transition takes effect on the first day of the month following the notification. To transition by 2026, the notification must be made in December 2025.
• Corporate tax (TAO)
  A tax payable on the profits of businesses, which is partially replaced by KIVA. It is worthwhile for companies to switch to KIVA if their wage costs are higher than their profits, or if they are planning to expand or increase their capital.
• Personnel-related payments
  Wages, benefits, and other personnel-related payments made to employees. This is one of the most important elements of the KIVA base, as the tax is payable on wage costs.
• Administrative tasks when switching to KIVA
  When switching to KIVA, the company must open a new fiscal year and submit a report and tax return for the previous period. Proper timing (e.g., switching at the end of the year) reduces the administrative burden.
• NAV KIVA notification
  To become a KIVA taxpayer, you must submit an electronic notification to the NAV.
  For a 2026 transition, the notification must be submitted by December 31, 2025, at the latest.
• LeitnerLeitner tax advisory service
  LeitnerLeitner’s tax advisors will analyze on a case-by-case basis whether it is worthwhile for your company to opt for KIVA. If you can indeed achieve savings and simplify your company’s operations and administrative tasks, we will safely guide you through the transition.
• LeitnerLeitner accounting services
  LeitnerLeitner bookkeepers / accounting advisors not only prepare your financial statements and reports efficiently and accurately, in accordance with local or international standards, but can also cover all administrative tasks as required by our services. We use the time freed up by automating document recording to identify discrepancies and problems and providing accounting advice. If necessary, we also involve our tax advisor and lawyer colleagues. We handle our clients’ requests in a complex and broad context.