Expat salaries for Techies in Budapest

exam11 wrote:

My company is considering to move me to Budapest for ~2 years for a very critical role.....My question is if there is any way I could get 5-6 million HUF/mo? Would there be any legal hurdles? Do you think if the company would balk at such a number?

Thanks

Obviously we know nothing of the details or your circumstances - if you have  kids, needs schools, special needs/health care, partner who doesn't work and blah-blah.  We do not know your actual citizenship or residence status either.

6M HUF/month is extremely high by HU standards and they will beat  you up tax wise. 

What you need is a properly designed "package".  Obviously US citizens are in a stranger position re: tax that others who can work the system perhaps to a better advantage.    US persons pay tax on world wide income regardless of source - US persons are FUBAR'd by FBAR.  This is not the same for others for whom there are varying degrees of tax residence.  I can only speak from experience as a non-US person.

It may be possible to split the package into salary and a living allowance for an overseas posting.  The living allowance should be  set up as a deduction as it covers things directly related to things like permits, housing, transport of family members and personal goods, school fees, medical, repatriation at the end etc. Your salary may therefore accumulate elsewhere at a lower tax rate than that here or may in fact accumulate tax free.  Just depends.   

This is a very nice situation to be in because essentially you live for free while building up your reserves elsewhere.    Personally I have taken apparently lower salaried jobs temporarily overseas simply because my expenses covered the Fluffy Clan's existence totally.  I never actually spent my salary during those periods.

Your HR department should be able to do this properly or they can design it with a local support company.         

It's not really the end salary that you should be primarily concerned about but how the whole thing is designed to minimise your liabilities while maximising your benefits. 

Obviously YMMV.

5 or 6 million HUF a month is somewhere around $18,000 a month.
No way does it seem anyone will pay you that much in Hungary unless you generate at least 10 times that much per month for them.
Taxes will murder you plus you will have to pay taxes in the US on this income as well.
If you are now making this much money a month, why in the world would you ever consider moving to Hungary?
I also find it odd that no one has discussed your pay scale but have thrown out this offer.
Perhaps if you are the CFO of this company you might make 1/4 this amount per month in Hungary with under the table deals.
One can not compare salaries from the US to Hungary.
My husband was a contractor for the Aerospace industry years ago, he worked under just one guy, was making over $40. an hour in the 1980's in S. Cal. Just 10 years back on a lark he saw this same sort of  job advertised in a Budapest newspaper when we were in Hungary on a holiday. He called up, asked the pay and couldn't believe his ears, they were willing to pay around 500 forints an hour.
Apples and oranges.

exam11 wrote:

My question is if there is any way I could get 5-6 million HUF/mo?

You can get paid anything you want. There is no income market cap that I am aware of. And I am sure the Hungarian government would be delighted to tax a 5-6 million a month salary. 

But I am sure your Hungarian co-workers would not be too pleased if they learned your salary. Could cause some social-workplace issues.

exam11 wrote:

Would there be any legal hurdles?

None that I am aware of. Just pay the taxes you are due in each country. And be aware the new SS agreement between Hungary and the USA is suppose to (in theory) take effect this year.

Also do be aware: at 5-6 million a month ($15-$20K), if you are single, you will go over the yearly allowed IRS Foreign Earned Income Exclusion ($100,800 for 2015). Anything above that, and you may also be paying income taxes on some of your income in both Hungary and the US (depending on your foreign income tax credits). So, your 1040 return will be more complicated. For help and accountants see:

http://hungary.usembassy.gov/taxes.html

exam11 wrote:

Do you think if the company would balk at such a number?

Almost certainly. But what harm in asking the company? Can the company do more than say "no"?

fluffy2560 wrote:

US persons are FUBAR'd by FBAR.

FBAR is a rather non-issue for most US tax payers**. If you have or had more than $10,000 in all your foreign accounts combined at anytime during the previous tax year, just go to :

http://bsaefiling.fincen.treas.gov/main.html

And fill out the form.

If you open a bank account in Hungary, just remember to bring along your SS card. The bank will need your SSN for Foreign Account Tax Compliance Act (FATCA) requirements.


**Some tax payers may also need to fill out Form 8938.

fluffy2560 wrote:

It may be possible to split the package into salary and a living allowance for an overseas posting.  The living allowance should be  set up as a deduction as it covers things directly related to things like permits, housing, transport of family members and personal goods, school fees, medical, repatriation at the end etc. Your salary may therefore accumulate elsewhere at a lower tax rate than that here or may in fact accumulate tax free.

Not quite. For example, housing costs provided by the employer are considered income to the IRS. You have to account for them on IRS form 2555. 

OP: To clarify what you can legitimately deduct or not as an American expat, talk to an accountant.

klsallee wrote:

....Not quite. For example, housing costs provided by the employer are considered income to the IRS. You have to account for them on IRS form 2555. 

OP: To clarify what you can legitimately deduct or not as an American expat, talk to an accountant.

Yes indeed, there you go then.  USA system is almost unique in taxing world wide income of citizens or pemie residents, regardless of where you are.  The only other I know of is The Philiippines.   

Us Brits have a different type of burden. We'd be taxed according to the tax treaty.  It's possible to live full time in the UK and not actually be resident for taxes. OK, there is a minimum tax. I think it's £30K flat rate.

klsallee wrote:

If you open a bank account in Hungary, just remember to bring along your SS card. The bank will need your SSN for Foreign Account Tax Compliance Act (FATCA) requirements.

In some countries, they will not even open a bank account for Americans in case they get fined by the US government in some random shake down on compliance.  Any bank with substantial interests in the USA may refuse to provide banking services. 

From what I read, quite a number of people renounce their US citizenship each year reduce their tax burden.

Marilyn Tassy wrote:

5 or 6 million HUF a month is somewhere around $18,000 a month.
No way does it seem anyone will pay you that much in Hungary unless you generate at least 10 times that much per month for them.
Taxes will murder you plus you will have to pay taxes in the US on this income as well.
If you are now making this much money a month, why in the world would you ever consider moving to Hungary?....

I don't find this amount of USD 18-20K a month particularly unusual for extremely well qualified individuals on a transfer.  Private military contractors in Afghanistan get about $15-$20K a month. But Budapest is not Kabul.   Some oil specialists and IT specialists can get this kind of money before taxes.  And that's just about anywhere.  If it was Singapore or Tokyo, this would be the kind of money needed as it's eye wateringly expensive in those places.

How much is the effective tax rate in Hungary? We pay over 40% (federal+state) in California.

"My company is considering to move me to Budapest for ~2 years for a very critical role."

In cases like that people get their current salary plus at least a 20-30% premium for the trouble of moving temporarily to a different country. If you're making 15k+ in California in tech, you should be able to find another job in CA that pays the same easily, so no reason to accept any "oh cmon with 5k per month in Hungary you'll live like a drug lord, it's good deal for you man" bullshit! 

Here is a net salary calculator, you can translate the fields using Google Translat: http://www.nettober.com/

exam11 wrote:

How much is the effective tax rate in Hungary? We pay over 40% (federal+state) in California.

See: https://www.expat.com/forum/viewtopic.php?id=506728

Side note: A 40% tax rate is the effective tax rate for someone living in CA earning between $150-$200K. If you are paying the effective rate, and if you have not already done so, consider talking to an accountant/financial advisor. They might be able to provide you with some options to reduce that tax rate.

fluffy2560 wrote:

In some countries, they will not even open a bank account for Americans

True. And that is a pity for Americans living there. 

But this is Hungary, not "some countries".  And Americans can open bank accounts here at most banks in Hungary.

fluffy2560 wrote:

in case they get fined by the US government in some random shake down on compliance.

If one is worried about an audit, simply hire a good accountant. Any American tax payer can also delegate their accountant to deal with the IRS on their behalf of their 1040.

fluffy2560 wrote:

From what I read, quite a number of people renounce their US citizenship each year reduce their tax burden.

Yes, this happens. A few thousand a year I have read. But with a population of 300 million one can debate if that is "quite a number" or not. But we digress.

Hopefully the replies have given you food for thought.
I think it's a bit cart before the horse to ask your question in a semi-public forum before speaking with your managers / HR dept.
From one perspective, there are tax and legal questions and implications.
From another, the question of COLA (Cost of Living Adjustment).
From another, the question of where you would go in the company after this "very critical role" that will last ~2 years.

I think the best thing is to get more specifics from your company about the position and compensation package (a typical package might include a combination of salary, bonus, living arrangements, insurances, car and/or fuel, etc.).  Then give this group more information if you have specific questions.  We have some collective knowledge about living and working in Hungary!

Vicces1 wrote:

From another, the question of COLA (Cost of Living Adjustment).

Which is totally BS. Your employer is not paying you so that you can cover your expenses. They are giving you money in exchange for the value you create for the company. If you move from country A to B, will you suddenly become less productive and create less value? No, they'll keep getting at least the same value.

Edit: COLA is BS in this specific case,if his employer would drastically decrease his pay. It makes a lot of sense when an employee is moved to a more expensive country, but in all cases there is the supply-demand thing: if they can find a local, much cheaper candidate, they won't move him to hungary for the same pay...

exam11 wrote:

How much is the effective tax rate in Hungary? We pay over 40% (federal+state) in California.

You will pay at least the same.  It doesn't matter where you go.   If you go to an OECD country, all the rates are effectively the same.  They may structure taxes slightly differently, but ultimately they will take ~45-55% off you wherever you are.

fluffy2560 wrote:

From what I read, quite a number of people renounce their US citizenship each year reduce their tax burden.

klsallee wrote:

Yes, this happens. A few thousand a year I have read. But with a population of 300 million one can debate if that is "quite a number" or not. But we digress.

No-one needs to do that elsewhere.   It's just a peculiarity of the US tax system.   I am sure we can return to this if the world wakes up to President Trump and queues start to form on the US-Canadian border.   

Thanks a lot folks. This all is great info.

fluffy2560 wrote:

I am sure we can return to this if the world wakes up to President Trump and queues start to form on the US-Canadian border.   

Why, on earth, would Canadians want, much less accept, a bunch of wimpy American refugees asking for political asylum in their country? 

When I was younger, and at University, the call was "resist the dominate paradigm!!!". And I did. We were proactive.

These days one is more likely to hear the defensive (rather than proactive): "you are expressing microagression against me!" (said in the very humorous "stop messing about" voice of Kennith Williams).   

But of course, this is completely, absolutely, and utterly: 

atomheart wrote:

Vicces1 wrote:

From another, the question of COLA (Cost of Living Adjustment).

Which is totally BS. Your employer is not paying you so that you can cover your expenses. They are giving you money in exchange for the value you create for the company. If you move from country A to B, will you suddenly become less productive and create less value? No, they'll keep getting at least the same value.

Edit: COLA is BS in this specific case,if his employer would drastically decrease his pay. It makes a lot of sense when an employee is moved to a more expensive country, but in all cases there is the supply-demand thing: if they can find a local, much cheaper candidate, they won't move him to hungary for the same pay...

I am ecstatic that you can speak on behalf of his employer!
Can you tell me the salary range percentile you expect to pay the OP?

Let's look at this from a non-international perspective.
If a company employs a person in the middle of NYC or San Fran, do you really think if that employee is reassigned to Iowa that they will receive the exact same salary?  Or conversely, that someone working in Nebraska accepting a move to NYC wouldn't get a COLA pay bump?

But I'm not here to argue with you. Again, allow the OP to have a conversation with his employer -- regardless of your opinion that any adjustment would be "BS".

"I am ecstatic that you can speak on behalf of his employer!"

I am not. I don't think his employer would ever try to convince him not to accept the salary that is realistic according to the hungarian job market. 

"If a company employs a person in the middle of NYC or San Fran, do you really think if that employee is reassigned to Iowa that they will receive the exact same salary?"

You're missing my point. If I make X/yr in NYC, and I can easily get another job in NYC with similar rate, I'd have to be a fool to move to Nebraska for X/3/yr. (Assuming that X is in a range where most of it goes to savings and not living costs.)

"Again, allow the OP to have a conversation with his employer -- regardless of your opinion that any adjustment would be "BS"."

Huh? Have I suggested not to have a conversation?

One more thought.

"If a company employs a person in the middle of NYC or San Fran, do you really think if that employee is reassigned to Iowa that they will receive the exact same salary?"

The word you were looking for is "slave". Employees aren't owned by the companies, they can negotiate and evaluate offers, sometimes even switch jobs! 

atomheart wrote:

One more thought.

"If a company employs a person in the middle of NYC or San Fran, do you really think if that employee is reassigned to Iowa that they will receive the exact same salary?"

The word you were looking for is "slave". Employees aren't owned by the companies, they can negotiate and evaluate offers, sometimes even switch jobs! 

Salary is only one part of the equation. Career moves and motivations can be different and more complex for each individual person.

Companies often adjust salaries based on local cost of living. If the transfer is simply a lateral one, then that may not be such a good deal for the employee. But then again, some people may like living in a place like Iowa over NY and may see the slower pace there as a quality of life upgrade (maybe able to spend more time with their family, as one example). Or if the reassignment is a promotion, then that is also something to consider, as a promotion may pad out your resume even better if you switch jobs later.