Published: 29.10.2021.
Updated: 23.08.2023.

The micro-enterprise tax is a tax that includes compulsory State social security contributions for the micro-enterprise owner and the personal income tax for the micro-enterprise owner for the part of the income from the economic activity of the micro-enterprise. Comparing the micro-enterprise tax regime with the general tax regime, the micro-enterprise tax regime is a preferential tax regime, which provides for reduced administrative requirements and easier tax payment procedures.

A micro-enterprise taxpayer shall be the owner of a micro-enterprise which has acquired the status of a micro-enterprise taxpayer.

The following persons may become a micro-enterprise taxpayer if they are not registered as value added tax payers:

  • • sole proprietorship,
  • • individual undertaking,
  • • farm or fishing enterprise,
  • • a natural person registered with the State Revenue Service as a performer of economic activity.

The taxation period of the micro-enterprise tax is a calendar year.

The micro-enterprise tax is applied to the turnover of the taxation period of the micro-enterprise.

The micro-enterprise tax rates are as follows:

for up to EUR 25 000 turnover, per year

25%

for the turnover part exceeding EUR 25 000, per year

40%

In the year when a micro-enterprise acquires the status of a micro-enterprise taxpayer from the 2nd quarter or later, the micro-enterprise tax rates shall be as follows:

Quarter by which a micro-enterprise acquires the status of a micro-enterprise taxpayer

Turnover, euro 

Rate

2. quarter

up to 18 750 

25%

for the part exceeding 18 750

40%

3. quarter

up to 12 500 

25%

for the part exceeding 12 500 

40%

4. quarter

up to 6 250 

25%

for the part exceeding 6 250 

40%

In order for a micro-enterprise to choose to pay the micro-enterprise tax, it must meet the following criteria:

  • the expected turnover will not exceed the VAT registration threshold;
  • the micro-enterprise is not a registered VAT payer and does not intend to become one until the VAT registration threshold is reached.

If a micro-enterprise becomes or has to become a registered VAT payer under the Value Added Tax Law, it will lose the status of the micro-enterprise taxpayer with the next taxation period (year).

Acquisition of the micro-enterprise taxpayer status

The status of a micro-enterprise taxpayer may be obtained:

  • concurrently with registration in the relevant register of the Enterprise Register, applying for the acquisition of the status of a micro-enterprise taxpayer;
  • a natural person concurrently with registration as a performer of economic activity, submitting an application to the SRS to acquire the status of a micro-enterprise taxpayer.

The SRS, upon receiving an application or information from the Enterprise Register, shall, take a decision within five working days to register the micro-enterprise taxpayer or a decision to refuse the registration.

For a newly established micro-enterprise, the status of a micro-enterprise taxpayer shall be applied from the day when the SRS has received the application or from the day when the newly established micro-enterprise is registered in the Enterprise Register.

If an already registered sole proprietorship, individual undertaking, farm or fishing enterprise, a natural person registered as a performer of economic activity wish to acquire the status of a micro-enterprise taxpayer, they must submit an application to the SRS regarding the acquisition of the status of a micro-enterprise taxpayer by 15 December of the pre-taxation year. It shall acquire the status of a micro-enterprise taxpayer from 1 January of the taxation period.

If a micro-enterprise has discontinued both economic activity and the payment of the micro-enterprise tax, it may not repeatedly choose to pay the micro-enterprise tax in the year of cessation of economic activity and in the following year.

Loss of the micro-enterprise taxpayer status

If the micro-enterprise taxpayer, starting from 1 January of the next taxation year, does not wish to be a micro-enterprise taxpayer anymore, but wishes to pay the personal income tax or enterprise income tax in accordance with general procedures, the micro-enterprise shall submit information to the SRS by 15 December of the taxation year that, starting from 1 January of the next taxation year, it will not be a micro-enterprise taxpayer.

A micro-enterprise shall lose the status of a micro-enterprise taxpayer with the next taxation period if:

  • the micro-enterprise becomes or must become a registered VAT payer;
  • the micro-enterprise taxpayer does not have turnover throughout the taxation period (this condition shall not be applied if the micro-enterprise taxpayer is registered after the first quarter of the taxation period);
  • the micro-enterprise is registered as a micro-enterprise taxpayer starting from the second quarter of the pre-taxation period and has no turnover in the pre-taxation period and taxation period.

If a micro-enterprise has an employee, the income of the employee from the micro-enterprise shall be subject to the personal income tax (salary tax) in accordance with the Law On Personal Income Tax and the employee shall be insured as an employee in accordance with the Law On State Social Insurance (in relation to employees of a micro-enterprise taxpayer who have been recruited until 31.12.2020, a transitional period has been specified until 30.06.2021, see section "Transitional provisions for micro-enterprise taxpayers in 2021").

From 1 July 2021:

• employees of a micro-enterprise taxpayer who have been recruited until 31 December 2020 will have to pay labour taxes in accordance with the general procedures in accordance with the Law On Personal Income Tax and the Law On State Social Insurance.

 

From 1 January 2022:

• the already registered micro-enterprise taxpayer, who is a registered VAT payer, will lose the status of a micro-enterprise taxpayer;

• already registered micro-enterprise taxpayer – Limited Liability Company will lose the status of a micro-enterprise taxpayer and become a corporate income tax payer (the change of status will take place automatically).

 

If in 2021 the number of micro-enterprise owners increases as a result of the change of micro-enterprise owner, the micro-enterprise taxpayer - Limited Liability Company will lose the status of micro-enterprise taxpayer from the day when the number of owners of the Limited Liability Company is increased.

In 2021, the micro-enterprise taxpayer has the right to change the status of a micro-enterprise taxpayer and become an enterprise income tax payer or personal income tax payer accordingly from the first date of the following quarter, submitting an application to the SRS by the 15th date of the last month of the current quarter.