Local Business Tax (HIPA) Calculator
Local business tax (helyi iparűzési adó, HIPA) applies to sole proprietors regardless of whether they use flat-rate taxation (átalányadó) or itemized-cost taxation (vállalkozói szja): it's a separate, municipal tax. This article summarizes how it works, then a calculator shows how much HIPA you'd owe under the general rule versus the simplified banded tax base.
What is HIPA, and who levies it?
Local business tax isn't levied or collected by NAV: it's levied by the municipality where your business is registered, under the Local Taxes Act, 1990. évi C. törvény (Htv.). Every sole proprietor must register for local business tax within 15 days of starting the activity, with the competent municipal tax authority (typically via the Electronic Municipal Portal, e-onkormanyzat.gov.hu). The rate itself is set by the municipality, capped at 2%: some (typically smaller) municipalities set it lower, even 0%.
The general rule's tax base
Under the law's general rule, the tax base is net revenue, reduced by the cost of goods sold (ELÁBÉ) and the value of mediated services, material cost, and subcontractor cost. For many low-material-cost service activities (consulting, development), this means in practice that the tax base ends up close to revenue, since there's little to deduct.
Simplified banded tax base for small businesses
Since 2023, small businesses, including a large share of sole proprietors, can choose the simplified banded tax base (Htv. § 39/A) if their annual revenue doesn't exceed 25,000,000 HUF. For sole proprietors doing exclusively retail trade under flat-rate taxation, that ceiling is 120,000,000 HUF. The choice can be made again each year, and the tax base is a fixed amount by revenue band, regardless of actual costs:
- up to 12,000,000 HUF revenue, the tax base is 2,500,000 HUF,
- between 12,000,000 and 18,000,000 HUF revenue, 6,000,000 HUF,
- above 18,000,000 HUF revenue (up to the eligibility ceiling), 8,500,000 HUF.
For retail-only flat-rate proprietors, this top band stays in effect all the way up to the HUF 120,000,000 eligibility ceiling, so the tax base stays at 8,500,000 HUF even at much higher revenue. A proprietor using the banded method typically doesn't even need to file a return, as long as the calculated tax doesn't exceed the advance already paid.
Which one should you choose?
If your actual, deductible costs (cost of goods sold, material cost, subcontractor cost) are low relative to revenue, true for most service-based sole proprietors, the banded base almost always means less tax than the general rule. For activities with a high material or subcontractor cost share (retail, construction), it's worth computing both, since the general rule's tax base can end up lower.
Payment deadlines
HIPA is paid in two half-year advances, due March 15 and September 15 in 2026, with the annual settlement, and, if needed, the return, due May 31, the same day as the SZJA return.
Calculator
Enter your annual revenue, any cost of goods sold and mediated services, material cost, subcontractor cost, and your own municipality's tax rate: the calculator shows, side by side, how much HIPA you'd owe under the general rule and under the simplified banded tax base.
This article and calculator are for general information only and do not constitute tax advice. Source: the Local Taxes Act, 1990. évi C. törvény, primarily §§ 39, 39/A, and 40 (net.jogtar.hu).
Last updated: July 31, 2026.