How to save cost of living in Budapest

laukok wrote:

So it is approx 1000 EUR per month for living in Budapest/ Hungary. It is more expensive than living in the UK, how come!??

Kind of all explains why there are so many more Hungarian citizens living and working in the UK than UK citizens living and working in Hungary.

klsallee wrote:

laukok wrote:

So it is approx 1000 EUR per month for living in Budapest/ Hungary. It is more expensive than living in the UK, how come!??

Kind of all explains why there are so many more Hungarian citizens living and working in the UK than UK citizens living and working in Hungary.

It's certainly easier to get set up in the UK but make no mistake, you will have very high living costs there.

The killer is accommodation.  It's fantastically expensive compared to Hungary.  If you live in London, it's unaffordable on low wages.  There's a culture of ownership and the rental sector is in the hands of private landlords.

Transport is also at very high costs if you have to commute.   There's also a per person tax on each area which can be significant.   So wages are higher but so are costs.

On the other hand, healthcare is good and it's free for all. Healthcare is actually free at point of delivery - no-one asks for minor things but they do for "big stuff" if they suspect the person is not legit.  But they would never withhold treatment because of issues over money.  They try and get the cash back later. 

Schools are also free, broadband is relatively cheap (but also not very good in some places) and mobile phones everywhere.  Cars are significantly cheaper but fuel costs about 30% more. University education is terribly expensive and likely to get people in very high debt over it and their living expenses.  Best to study in Germany or elsewhere where tuition costs is much lower and living costs are about the same.

Hungary is not a friendly country for businesses as it has high taxes and over regulation.  All of that just creates overheads.  Superficially tax rates are lower here but they gouge you on VAT and other hassles.   Like here, in the UK, there's ACT - Advanced Corporation Tax.   Pay in advance and then if you don't have turnover, you have to claim it back.  It's a significant juggling act for cashflow if you have things like bad payers, slow payers etc.   Moreover, everything is moving digital (like here) and it's compulsory for companies in the UK to have real time reporting to the tax office.  VAT administration is just horrible everywhere in the EU especially for cross border traders.   

If anyone values their free time, paying the accountant EUR 100 is well worth it.

fluffy2560 wrote:

If anyone values their free time, paying the accountant EUR 100 is well worth it.

Depends. If one bills only one client, once a month for example, the accountant has almost no work. Than one can try to get the accountant fee as low as 40-50 EUR a month. Saving 600 - 700 EUR a year in accountant fees is worth asking.

klsallee wrote:

fluffy2560 wrote:

If anyone values their free time, paying the accountant EUR 100 is well worth it.

Depends. If one bills only one client, once a month for example, the accountant has almost no work. Than one can try to get the accountant fee as low as 40-50 EUR a month. Saving 600 - 700 EUR a year in accountant fees is worth asking.

Yes it's true.  What I used to think about on any of these things (using "professionals" to do stuff) is weighing up my free time and my effective daily or hourly rate. If my rate is higher than theirs, then obviously it's a no-brainer they should do it.

I should say one nightmare in the UK which inevitably could turn up here is the idea of "disguised employment".  With one client, and the ability to claim back expenses and VAT etc., it looks like it could be a tax avoidance scheme (at least to the authorities).  In the UK this is particularly a problem for people and I believe it's also the same in the USA.   There's a cat and mouse situation with the company owners (the mice) trying to avoid the attention of the authorities (the cat).

There's a more recent new dimension which is the severe tension between a single client billing and employment legislation.  For example (in the UK), Uber drivers were considered self-employed by Uber but in fact they were - according to employment tribunals - just disguised employees and therefore entitled to employment law protection (holiday pay, sick pay etc).  The issue for the government was that people were able to avoid paying higher rates of social taxes.  Ok, Uber isn't here but one can imagine similar situations evolving.

atomheart wrote:

You know, that the minimum share capital for a "kft" is about 10.000EUR, right?

That's only on paper.  A company (Kft) is a limited liability company and therefore is a legal person in its own right.

In general with limited companies, and casting my mind back some years,  the usual technique upon formation for the company to borrow the money (from the owners) for start up.  It only needs have the asset available on formation, not actually to continue to hold it.

The new company will immediately have a debt which it has to pay back to the creditors (actually the owners). 

Obviously the loan should be paid back formally according to a formal agreement between the owners and the company and if there is interest, tax will need to be paid on that.

It's basically a way of delaying taxation on the company - if it makes a loss over some years, there can be no tax to pay in those years.

In some countries, the company can make loans to the directors or pay back via dividends. The rate of tax depends on the mechanism used.  It's either income or capital gain. I think here, it's income but in other countries, it's considered capital gain (as it's paid on shares).

Oh, and the costs of formation can be claimable as an expense. I've seen that done before.

But obviously anyone doing this should get advice from a professional.