Published: 29.10.2021.
Updated: 29.01.2024.

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 rate is 25%.

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.

A micro-enterprise taxpayers have the option to use the simplified tax payment solution – an operating income account within the meaning of the law “On Taxes and Fees” for the calculation and payment of the micro-enterprise tax.

Within the framework of mentioned solution micro-enterprise taxpayers do not have to submit a quarterly return of micro-enterprise tax and pay micro-enterprise tax in the general procedure, but this will be provided by the credit institution and the State Revenue Service.

The general regulation on the simplified tax payment solution – an operating income account is laid down in the law “On Taxes and Fees”. The Micro-enterprise Tax law lays down regulation regarding the application of the micro-enterprise tax.

Conditions for micro-enterprise taxpayers to use the simplified tax payment solution – an operating income account:

  1. the micro-enterprise taxpayer complies with the conditions laid down in the law “On Taxes and Fees” regarding the use of the simplified tax payment solution;
  2. the micro-enterprise taxpayer does not have micro-enterprise tax debts on the day when he or she applies for the use of the simplified tax payment solution;
  3. all operating income of the micro-enterprise taxpayer has been transferred or paid into the operating income account;
  4. the micro-enterprise arranges accounting in a single entry system.

If the micro-enterprise taxpayer has earned economic activity revenue in cash during the taxation year, he or she shall pay all cash into the operating income account within 15 days from the day of receipt of cash but not later than:

  • until 31 December of the taxation year (in general case);
  • until termination of economic activity if the micro-enterprise taxpayer terminates economic activity during the taxation year;
  • until termination of the use of the simplified tax payment solution if the micro-enterprise taxpayer terminates the use of the simplified tax payment solution during the taxation year.

Micro-enterprise taxpayer can start using the simplified tax payment solution:

  1. from the day of acquiring the status of a micro-enterprise taxpayer – if the owner of a newly established micro-enterprise chooses to be a micro-enterprise taxpayer;
  2. from 1 January of the next taxation year – if the enterprise income taxpayer or personal income taxpayer changes the applicable tax scheme to the micro-enterprise tax scheme from the following taxation period;
  3. from the first date of the following quarter – if the micro-enterprise taxpayer is already operating in the micro-enterprise tax scheme.

The simplified tax payment solution can be terminated in one of the following ways:

  1. from the first date of the following quarter;
  2. from the day when it loses the status of a micro-enterprise taxpayer.

If a micro-enterprise taxpayer does not comply with the conditions laid down in the Micro-enterprise Tax law or the law “On Taxes and Fees” in relation to the use of the simplified tax payment solution, he or she shall submit the quarterly micro-enterprise tax return for the current quarter and pay the micro-enterprise tax in accordance with the general procedures.