According to the Ministry of Finance, the act promotes micro-businesses and improves their tax behaviour. The fulfilment of the tax obligations arising from the provision of services and sale of goods by natural persons is simplified in order to achieve this. A special taxation procedure is established in the case of which the data required for taxation are submitted and the tax obligations are fulfilled in a simplified manner.

The act gives natural persons the possibility to provide services and sell goods via a special business account. The main objective of the business account is to simplify the fulfilment of the tax obligations arising from the provision of services and sale of goods by natural persons to other natural persons. This solution is also suitable for the natural persons who provide a service on a small scale or sell a product they have made, i.e. engage in business on a small scale or from time to time, in addition to their principal activity (e.g. working on the basis of an employment contract).

The business account is a bureaucracy-free and affordable form of business meant for natural persons (not sole proprietors). It is subject to 20% income tax and is aimed at small entrepreneurs, whose annual income does not exceed 25,000 euros. Any amount that exceeds this income is subject to 40% tax.

An entrepreneur who uses a business account does not have to submit any reports or spend time and money on accounting. Everything takes place automatically via the business account. The bank automatically transfers 20% of business income tax on any income received to the bank account of the Tax and Customers Board every month. This means that the entrepreneur keeps 80 cents of every euro earned. Similar to people working on the basis of contracts under the law of obligations, a person who uses a business account is also entitled to health insurance if the business income tax paid by the person exceeds the minimal social tax amount required for being eligible for health insurance.

A person has to open a special business account in the bank in order to fulfil their tax obligations in the simplified manner. The business account is primarily meant for natural persons who offer their services and goods as a secondary activity and who do not have to spend large amounts of money on tools and equipment. It is also meant for the entrepreneurs whose business income tends to be small, which means that spending money on accounting would not be reasonable. Commercial undertakings and sole proprietors are not permitted to establish business accounts. In addition to this, legal entities must pay the so-called commercial undertaking’s income tax on the amount of a service received from a natural person, as the Ministry of Finance is of the opinion that entrepreneurs would otherwise lose the motivation to create employment relationships.