25. 12. 2024.
Flat taxation represents one of the simplest ways to run a business for entrepreneurs engaged in specific activities.
If you are considering starting a business or you are already an entrepreneur, this blog will help you better understand the rules and obligations you have as a flat taxpayer.
WHAT DOES IT MEAN TO BE A FLAT TAX ENTREPRENEUR?
A flat tax entrepreneur is an individual who conducts independent activities and is taxed based on estimated income, not actual income.
To become a flat taxpayer, you must meet certain conditions and comply with legally prescribed criteria.
MAXIMUM REVENUE
Flat tax entrepreneurs must pay attention to their revenue levels. The maximum annual revenue that a flat taxpayer can achieve is 18.000,00€. If the revenue exceeds this amount, the entrepreneur can no longer remain a flat taxpayer and must switch to taxation based on actual income.
WHICH ACTIVITIES CAN BE REGISTERED FOR FLAT TAXATION?
Not all activities can be registered as flat-taxable. Only certain types of businesses qualify for this type of taxation. Among them are: basket makers, net makers, weavers, carpenters, arts and crafts, watch repairers, potters, packers, millers, chimney sweeps, wool carders, domestic crafts, collection of medicinal herbs and wild fruits, cultivation of fruits and vegetables, production of lime, bricks, and tiles, charcoal production, blacksmiths, taxi drivers, fishermen, shoemakers, barbers, sellers of popcorn, corn, chestnuts, etc., shell breeders, beekeepers, bookbinders, tachograph and taximeter service providers, offering tourist accommodation services in rural and mountainous areas, vine makers, tailors, scale repairers, watch repair and sales, video clubs, tool makers, battery repair and service providers, plumbers, locksmiths, production of soda water and non-alcoholic beverages, handbag makers, carpenters, transportation services up to 8 tons capacity, taxi (minibus vehicles), production of vine and other seedlings and grafts, breeding and sale of ornamental birds, making stamps and seals, precision mechanics, metal turners, selling agricultural products at market stalls, basket weavers, woodworkers, carpentry machine services, funeral services, mechanics, cutting tool manufacturing, stone cutters, florists, vulcanizers, chicken and egg production, maintenance and servicing of boat engines, servicing boat tanks, framing pictures, tinsmiths, key makers, bag makers, sewing machine repair, agricultural vehicle body repair, automotive body repair, automotive mechanics, auto service providers, auto electricians, transportation services over 8 tons capacity, vehicle washing and lubrication, electromechanical engineers, masons, painters, parquet layers, ceramicists, terrazzo workers, glaziers, photocopying services, collection, purchase, and sale of waste, floor dry cleaning, maintenance and repair of computers, maintenance and repair of mobile phones, construction machinery services, machining of auto parts, household installation repairs, firm typists, photographers, engravers, welders, decorators, maintenance of TT networks, alarm installation, RTV mechanics, electricians, electrical fitters, repair of musical devices, repair of household appliances, roasted meat shops, meat drying, maintenance of central heating, and merchants and caterers operating in stalls, temporary facilities, similar modular or mobile structures, confectioners, bakers, coffee roasters, beauticians, and other similar activities.
OWNERSHIP RULES
Each flat-tax activity can have only one owner. This owner is simultaneously authorized and responsible for all business activities. The owner of a flat-tax business has unlimited liability, which means they can be responsible for all business obligations. If the entrepreneur has any debts, creditors can collect from the entrepreneur's personal assets, including money in bank accounts, vehicles, real estate, etc.
HOW ARE CONTRIBUTIONS CALCULATED?
Contributions on the owner’s income are calculated solely based on revenue and the type of activity. Flat taxpayers are divided into four main groups by type of activity and further classified into three subgroups based on revenue levels.
THIS IS WHY THE MONTHLY OBLIGATIONS TO THE STATE CAN VARY FROM 53.75 EUR TO 260.25 EUR.
DEADLINES FOR SUBMITTING REQUESTS
The request for flat taxation on income from independent activities must be submitted by the taxpayer to the relevant tax authority by December 31 of the year preceding the year for which the tax is assessed. Depending on the revenue generated in the current year, the tax for the following year is calculated.
MAINTAINING A REVENUE BOOK
One of the mandatory records that every flat taxpayer must keep is a revenue book in which all income is recorded. This book must be submitted along with the request for flat taxation so that the tax authorities can assess the actual revenue and determine the tax.
Flat taxation is an ideal solution for entrepreneurs who do not want to spend much time on bookkeeping and administration but have predictable incomes below the threshold of 18,000 annually€. This way of doing business is simpler, with less bureaucratic obligation, but requires careful monitoring of revenue to avoid complications with switching to a different tax regime.
If you need further assistance with the registration process or managing your business, Perfectum is here to help. Contact us for more information!
