anyone here with experience running a company in Hungary?

[JohnLocke]

Hey, I just opened my company in Hungary. I can help you with everything you need. Cheers

What business are you into?

 

[Jerry1911]

Hey, I just opened my company in Hungary. I can help you with everything you need. Cheers

What are your monthly and yearly costs? How much did it cost to incorporate the company?

 

[anotherone]

I have the opportunity to work with several accounting companies of Budapest.
At work, I found hungarian people unreliable, slow, unproductive compared to Croatian and Romanian.

Then, I discovered there were no Uber and no Glovo. Hungary is a soviet country in the middle of Europe. Their legal framework is more complicated than any other central European country.

One of my Italian Friends created a company in Hungary. He stayed there 2 years and came back to Milano. He told me he was enough waiting for Hungarian workers chatting while they should be at work.

So, if you send them an email, maybe they will answer in a week, maybe they will never answer. If you order them to do something, maybe they will deliver two weeks late (this happened to me).

Budapest is one of the most beautiful european cities but beautiful walls can't help us to be financially successful

 

[Jerry1911]

That's sad to hear as Hungary was recommended to me as the place to incorporate in for easy EU access and VAT registration.

 

[anotherone]

Hungary is OVERESTIMATED:

I forgot to mention that I know a man who was a self employed in Hungary, and he received a letter from the tax authority asking him to pay more social contribution for the past 4 years. Self employed individuals pay less social contribution than employees. If the Hungarian tax authority sees that you get your money from one source, you are considered to be an employee.
Now, self employed individuals (under KATA regime) also have been banned from working for companies.

Parliament on Tuesday adopted the amendments to the regulations of the Itemised Tax for Small Businesses (KATA), pushing the income threshold for taxpayers to 18 million forints (EUR 44,000) per year from 12 million, and restricting the circle of eligible entrepreneurs.
KATA will be available for sole proprietors only from September 1. To eliminate hidden employment, only entrepreneurs providing services and goods for private customers would be eligible.

The sole exception are taxi drivers, who could remain within KATA while providing services for companies too.

According to the amended legislation, KATA taxpayers will continue to pay a flat monthly rate of 50,000 forints instead of corporate or payroll tax. Income over the 18 million threshold would be taxed at a rate of 40%.

Taxpayers no longer eligible for KATA have the opportunity to change to flat-rate tax payment until October 31.

The finance ministry said in a statement that the amendment had been warranted by reports of abuse of the KATA system, where employers forced employees to work as sole proprietors, “harming state coffers, employees and honest taxpayers alike.”

The new KATA system will eliminate abuse and improve the tax environment for small and micro entrepreneurs working for private customers, it said.

Parliament adopted the amendment with 120 votes in favour, 57 against and one abstention in an expedited procedure on Tuesday afternoon.

https://xpatloop.com/channels/2022/...rough-in-hungary-despite-street-protests.html

I also didn't talk about the problem of corruption in Hungary.
https://www.france24.com/en/live-ne...ry-risks-eu-funding-cut-over-corruption-fears
Viktor Orban isn't a good nationalist who cares about his people. He is just a clown in economy just like Putin

 

[Jerry1911]

I forgot to mention that I know a man who was a self employed in Hungary, and he received a letter from the tax authority asking him to pay more social contribution for the past 4 years. Self employed individuals pay less social contribution than employees. If the Hungarian tax authority sees that you get your money from one source, you are considered to be an employee.
Now, self employed individuals (under KATA regime) also have been banned from working for companies.

Same thing has been done/implemented in Croatia. It's the equivalent of UK's IR35 rules.

https://en.wikipedia.org/wiki/False_self-employment

 

[RealDude]

Addition: Foreigners are not welcome in Hungary

 

[Marzio]

Addition: Foreigners are not welcome in Hungary

Could you please elaborate? Why you say so?

 

[RealDude]

Orban:

- Hungarians did not want to become "peoples of mixed race"
- Orban has spoken about maintaining "ethnic homogeneity" in Hungary
- in contrast to Western Europe's "mixed-race world" where people mixed with arriving non-Europeans, Hungary was not a mixed race country
- "I am the only politician in the EU who stands for an openly anti-immigration policy,"

PS: I know, we are all expats, not immigrants

https://www.reuters.com/world/europ...-not-rooted-racism-after-backlash-2022-07-28/

 

[Jerry1911]

Nothing wrong with being against uncontrolled non-European mass immigration sponsored by the Open Society Foundation and whatnot.

I'm sure Orban and Hungarians in general have nothing against actual Europeans moving to Hungary.

 

[anotherone]

Taxation of dividends​

In the 2022 tax year, income from dividends paid to individuals is subject to a 15 percent personal income tax. According to the main rule, the payer must determine the tax charged on the dividend at the time of payment, deduct it, and pay it by the 12th of the month following the payment and provide data in return 08.

The tax on dividends earned in a foreign currency must be determined in the same foreign currency, deducted and converted at the exchange rate valid at the time the income was earned, and paid in forints.

In the absence of a payer, the private individual must determine the tax on the dividend and dividend advance himself, and the individual must pay the tax by the 12th day of the first month of the quarter following the payment [Article 66 (3) of the Szja Act].

Taxation of dividend advances​

The payer must deduct 15% personal income tax from the dividend advance paid to private owners , which the private individual can calculate as a tax advance against the tax determined after the final dividend. The dividend advance must be indicated in the return for the year of payment only as information (if a dividend advance was paid in 2021, then on line 56 of sheet 21SZJA-B), i.e. it is not declared as separately taxable income.

Declaration of dividend advance as actual dividend​

If the previously paid dividend actually turns into a dividend in 2021, in that case, the income from the dividend must be declared on line 167 of sheet 21SZJA-04 based on the data according to the report . The tax previously paid on the dividend advance is shown on line 66 of sheet 21SZJA-C , but the individual no longer has to pay the tax on the declared dividend as his own obligation.

Social contribution tax liability​

After the dividend payment, in addition to the personal income tax burden of 15 percent, it is also necessary to pay social contribution tax, the rate of which is 13 percent . The social contribution tax must be paid until the sum of all incomes subject to the social contribution tax obligation reaches 24 times the minimum wage , i.e. HUF 4,800,000 in 2022. In the case of calculating the social contribution payment ceiling, the total amount of all income that falls under the obligation to pay social contribution, such as wages, membership income, income from property rental, dividends, can be taken into account.

It is important to note that social contribution tax does not have to be paid on the dividend advance , it is only necessary if the dividend advance is converted into a dividend.

------
So if you want to get paid via dividencds from a Hungarian company while living in Hungary, you will pay CIT 15% + Dividend tax 15% = 30% and then, you will have to pay social contribution which is maximum 13% of HUF 4,800,000 = 614000 HUF = 9820 euros

 

[thedirtyteller]

Taxation of dividends​

In the 2022 tax year, income from dividends paid to individuals is subject to a 15 percent personal income tax. According to the main rule, the payer must determine the tax charged on the dividend at the time of payment, deduct it, and pay it by the 12th of the month following the payment and provide data in return 08.

The tax on dividends earned in a foreign currency must be determined in the same foreign currency, deducted and converted at the exchange rate valid at the time the income was earned, and paid in forints.

In the absence of a payer, the private individual must determine the tax on the dividend and dividend advance himself, and the individual must pay the tax by the 12th day of the first month of the quarter following the payment [Article 66 (3) of the Szja Act].

Taxation of dividend advances​

The payer must deduct 15% personal income tax from the dividend advance paid to private owners , which the private individual can calculate as a tax advance against the tax determined after the final dividend. The dividend advance must be indicated in the return for the year of payment only as information (if a dividend advance was paid in 2021, then on line 56 of sheet 21SZJA-B), i.e. it is not declared as separately taxable income.

Declaration of dividend advance as actual dividend​

If the previously paid dividend actually turns into a dividend in 2021, in that case, the income from the dividend must be declared on line 167 of sheet 21SZJA-04 based on the data according to the report . The tax previously paid on the dividend advance is shown on line 66 of sheet 21SZJA-C , but the individual no longer has to pay the tax on the declared dividend as his own obligation.

Social contribution tax liability​

After the dividend payment, in addition to the personal income tax burden of 15 percent, it is also necessary to pay social contribution tax, the rate of which is 13 percent . The social contribution tax must be paid until the sum of all incomes subject to the social contribution tax obligation reaches 24 times the minimum wage , i.e. HUF 4,800,000 in 2022. In the case of calculating the social contribution payment ceiling, the total amount of all income that falls under the obligation to pay social contribution, such as wages, membership income, income from property rental, dividends, can be taken into account.

It is important to note that social contribution tax does not have to be paid on the dividend advance , it is only necessary if the dividend advance is converted into a dividend.

------
So if you want to get paid via dividencds from a Hungarian company while living in Hungary, you will pay CIT 15% + Dividend tax 15% = 30% and then, you will have to pay social contribution which is maximum 13% of HUF 4,800,000 = 614000 HUF = 9820 euros

That's what I hate when a country might have low corporate tax or something else, but then there is that catch that no one tells you about till the very end.

 

[Marzio]

you will pay CIT 15%

CIT is 9% BTW but thanks for the detailed review.

 

[John Noel]

Hey, I just opened my company in Hungary. I can help you with everything you need. Cheers

So is it true that bureaucracy is terrible and you end up paying more than 9% at corporate level?
Also how much did you spend in advisory/hosting/legal services for the initial setup and ongoing maintenance?

 

[MiltonStone]

Before you take that step you want to find a legal & tax advisor to help you clarify your personal situation. They may tell you if it is a good move to do for you or not.