Son of 1956 Refugee verifying my own Hungarian Citizenship

atomheart wrote:

fluffy2560 wrote:

So, in the simplest case, if you are a Hungarian but live and work in Germany, you pay taxes there, not in Hungary.  The Hungarian nationality is irrelevant.

Hungary is a special case, the only one in EU that does this to my knowledge. If as a hungarian you move to a country that has no DTA with Hungary, and you're only a hungarian citizen, the money you earn there is going to be taxed bu Hungary in theory.

Actually it's the same elsewhere. Hungary is not unusual in this regard. 

The OECD model is THE common model throughout the world.   The fallback position is to tax where you come from if there is no tax treaty but this only applies according to residence or where income arises.

Countries like the USA or Australia have extensive tax treaties so there's almost nowhere you can be which does not have a treaty.  I can cite a few countries like Burma (aka Myanmar) and Nepal which do not have well developed DTA networks worldwide but have "local" or "trade" developed DTAs - e.g. with their neighbours or regional players like Japan.

Hungary may wish to to tax but the host country will tax too - they can choose resident or non-resident according essentially on a whim.  So that's just tough on the individual as there's no offset available to use via the DTA and a tax certificate. After all, all the tax office wants is the money.

It's a rather complicated area.  UK is a good example - we have various categories of the connections to the motherland - e.g. domicile, non-domiciled, resident, non-resident blah-blah.  I don't know of any other country with such obtuse distinctions although they fit with the DTAs.  USA is a slam dunk - US passport - US taxes (with offset).  The only other certainty is death.

fluffy2560 wrote:

Hungary may wish to to tax but the host country will tax too

Yes that's exactly what I'm saying, that in some cases Hungary will want to tax you even if you're not a resident, and if you look at the table on the page I linked, you'll see that for most countries there is just a "no".

atomheart wrote:

fluffy2560 wrote:

Hungary may wish to to tax but the host country will tax too

Yes that's exactly what I'm saying, that in some cases Hungary will want to tax you even if you're not a resident, and if you look at the table on the page I linked, you'll see that for most countries there is just a "no".

I don't see that's really any different to anywhere else.  It's the residence test which matters more for most people unless there's some obscure situation.   If you read a DTA, then you see a hierarchy of tests applied. The authorities have the luxury of selecting which tests they feel like they need to satisfy their collection needs.   

I can only think the reason why this is singled out in the link provided is selection of tax jurisdiction.  A resident or citizen cannot claim a tax advantage to the detriment of another jurisdiction where he/she is also resident or a citizen.  For example, a French/Norwegian dual national could not claim a tax advantage from selecting France or Norway as residence while effectively resident in the other country.   This is probably what the  Hungarian entry means, i.e. HU citizenship trumps another.   

There are exceptions to this with which I am generally familiar - in the UK, it's perfectly possible to be living in the UK full time but not actually be resident for tax purposes.  That kind of exotic arrangement is only for the rich who can organise themselves that way.  These are the so called "non-doms" or non-domiciled individuals.  In which case there's an alternative minimum flat rate annual tax.

fluffy2560 wrote:

atomheart wrote:

fluffy2560 wrote:

Hungary may wish to to tax but the host country will tax too

Yes that's exactly what I'm saying, that in some cases Hungary will want to tax you even if you're not a resident, and if you look at the table on the page I linked, you'll see that for most countries there is just a "no".

I don't see that's really any different to anywhere else.  It's the residence test which matters more for most people unless there's some obscure situation.   If you read a DTA, then you see a hierarchy of tests applied. The authorities have the luxury of selecting which tests they feel like they need to satisfy their collection needs.   

I can only think the reason why this is singled out in the link provided is selection of tax jurisdiction.  A resident or citizen cannot claim a tax advantage to the detriment of another jurisdiction where he/she is also resident or a citizen.  For example, a French/Norwegian dual national could not claim a tax advantage from selecting France or Norway as residence while effectively resident in the other country.   This is probably what the  Hungarian entry means, i.e. HU citizenship trumps another.   

There are exceptions to this with which I am generally familiar - in the UK, it's perfectly possible to be living in the UK full time but not actually be resident for tax purposes.  That kind of exotic arrangement is only for the rich who can organise themselves that way.  These are the so called "non-doms" or non-domiciled individuals.  In which case there's an alternative minimum flat rate annual tax.

It makes a difference when you realize income in a country .hu has no DTA with, and there are some, Bolivia, for instance. (Or some other SA country, I'm not sure.) Even if you pay your taxes in Bolivia, you'd also have to pay taxes in .hu. Probably won't matter if you have no assets in .hu and never plan to return, but if you do, you might be forced to pay those taxes.

Atomheart is right, Hungary is a special case.

Citizens of most countries (apart from the U.S.) are not subject to tax by their home countries when they're not resident there.

Hungary has added an exception to that general rule, which in effect says, "we'll nonetheless tax a non-resident Hungarian if he's not being taxed someplace else" (to simplify a bit).

(I'm not familiar with the details of this law, in particular the precise conditions under which a non-resident becomes subject to Hungarian tax. The above is just the gist of the law.)

atomheart wrote:

...It makes a difference when you realize income in a country .hu has no DTA with, and there are some, Bolivia, for instance. (Or some other SA country, I'm not sure.) Even if you pay your taxes in Bolivia, you'd also have to pay taxes in .hu. Probably won't matter if you have no assets in .hu and never plan to return, but if you do, you might be forced to pay those taxes.

That's the same as anywhere else as I said - just tough luck.  You'll get taxed taxed twice twice. 

This is why it's called a DTA - Double Taxation Agreement. 

Really it should be called a ADTA - Avoidance of Double Taxation Agreement.

The chances of getting "caught" by this tax issue are quite low but in one of the quirks of modern life, the onus is on the taxpayer to prove the authorities wrong.   In other words, it's guilt before innocence.

Of course if you have no assets available then there's not really anything they can do about it other than lock you up but what they'd rather do is get the cash. Locking people up removes their opportunity to pay the debt.    So that's extreme.  But if they want some pubicity, they'll go after big fish and make a song and dance about it. 

Most modern tax systems rely on self-declaration.  This is not always the case.  Usually those people with simple affairs - e.g. one income source of modest amounts, retired or in full time employment in country do not have to submit tax returns (USA exception).   This is mainly a government manpower saving idea but it's also efficiency - best to spend money on where targeted tax investigations brings greater returns.  Just like any business.

For the majority of people, the tax system is completely impossible to understand or avoid.  There's no way  an ordinary citizen can navigate it.  The USA is a particularly nasty place where tax is concerned.  Other countries are far better organised - Canada is considered good and Australia is considered particularly good - professional and fair minded.

fluffy2560 wrote:

That's the same as anywhere else as I said - just tough luck.  You'll get taxed taxed twice twice.

No, in most countries, if you're not a resident, and don't spend at least N months /year in the country you're a citizen of (= you're not a tax resident), it won't tax your worldwide income.

zif wrote:

Atomheart is right, Hungary is a special case.

Citizens of most countries (apart from the U.S.) are not subject to tax by their home countries when they're not resident there.

Hungary has added an exception to that general rule, which in effect says, "we'll nonetheless tax a non-resident Hungarian if he's not being taxed someplace else" (to simplify a bit).

(I'm not familiar with the details of this law, in particular the precise conditions under which a non-resident becomes subject to Hungarian tax. The above is just the gist of the law.)

This may give more details:

https://www.nestmann.com/hungary-now-im … -citizens/

From above:

Hungarian citizens living in a country that doesn't have a tax treaty with Hungary must continue to pay Hungarian income tax. They can credit 90% of the foreign taxes paid toward their Hungarian tax obligations, although this credit can be no more than the Hungarian tax that would be due on the foreign income.

Fortunately, Hungary doesn't require that Hungarian citizens renounce citizenship to end these obligations. They merely need to obtain a second passport and also avoid having their domicile or "regular place of abode" in Hungary. In contrast, the only way that U.S. citizens can end lifetime servitude to the IRS is to give up their U.S. citizenship and passport.

So, atomheart was only partly correct (at least from the above -- I have not read the actual Hungarian law). If one gets a foreign passport, AND has no domicile in Hungary, then there is no Hungarian tax due.

Unlike, say the USA. Where I still have to file my 1040 year, after year no matter how many foreign passports I amass or how long I live abroad.

klsallee wrote:

They merely need to obtain a second passport

That is, they need to have a second citizenship, like I said.

zif wrote:

Atomheart is right, Hungary is a special case...

It's not really such a special case. It's pretty much the same as elsewhere. 

Don't forget the authorities can simply say you are resident and it's up to you to prove otherwise.  Not an unusual power.  The only way to know for sure these rules is to examine the tax laws in detail but even then, the interpretation may surprise people when applied "in the field".

If the Hungarian does not have assets in Hungary (such as a place to live - goes to residency), then there's no way to enforce it or indeed know what the overseas Hungarian is earning - unless self-declared or CRS or simply applying an asset or wealth test.

For example:

Tycoon Laszlo has personally purchased a new Ferrari which must have been bought from income.  So where's the declaration and where's the tax (if any) related to the income?   

On the other hand, musician Tamas returns from living in a yurt based hippy compound in Mexico with a just his clothes and sandals, a few forints, a worn out guitar and a used bong in his back pack.  Nothing to tax - personal effects, tools of trade etc.

The only countries I know which do taxes on citizenship are the USA and the Philippines.  I have a feeling Burma might be the same but they do not enforce their income tax laws at the moment.

"So, atomheart was only partly correct . . ."

No, he was right on. He said in his original post, "Hungary does tax worldwide income, unless you have a second citizenship or there is a tax treaty between the two countries."

And yes, Hungary is a special case. I'm not aware of any other country with such a rule.

This rule, among other things, keeps Hungary from becoming a tax bolt-hole for Americans who get Hungarian citizenship, give up their U.S. citizenship, then manage to float about such that they don't establish a tax residence anywhere. Perhaps that was the motive, I don't know.

atomheart wrote:

fluffy2560 wrote:

That's the same as anywhere else as I said - just tough luck.  You'll get taxed taxed twice twice.

No, in most countries, if you're not a resident, and don't spend at least N months /year in the country you're a citizen of (= you're not a tax resident), it won't tax your worldwide income.

That's not entirely right.  True on worldwide if OECD model, but not local income.   

You will (usually) have non-resident withholding if you have any income arising in that country.  There's no period of waiting to see if you are resident as it's applied transactionally.

The primary test is if there's a DTA.

zif wrote:

"So, atomheart was only partly correct . . ."

No, he was right on. He said in his original post, "Hungary does tax worldwide income, unless you have a second citizenship or there is a tax treaty between the two countries."

Good grief. Read what I quoted.

avoid having their domicile or "regular place of abode" in Hungary

Second citizenship AND no domicile in Hungary. He missed the second part. That is, the person has to actually declare residence abroad. Officially. In Bolivia, for example. Not just "hang out" in Bolivia for a year (with some expat make believe belief taking a weeks vacation in Rio sets back the "tourist clock" in Boliva).

zif wrote:

No, he was right on. He said in his original post, "Hungary does tax worldwide income, unless you have a second citizenship or there is a tax treaty between the two countries."

And yes, Hungary is a special case. I'm not aware of any other country with such a rule.

This rule, among other things, keeps Hungary from becoming a tax bolt-hole for Americans who get Hungarian citizenship, give up their U.S. citizenship, then manage to float about such that they don't establish a tax residence anywhere. Perhaps that was the motive, I don't know.

Many US citizens renounce to get out from under the IRS oppression.  Don't see Hungary as a special case in that regard.  Anyone with piles of cash can simply move to the Bahamas or Malta and buy their passports.  Anyone can also move to a non-tax jurisdiction like Dubai.  Just need money

It's not normally possible to renounce and become stateless.  Governments cannot easily terminate nationality and citizenship either if it means statelessness or some other oppression.

fluffy2560 wrote:

Many US citizens renounce to get out from under the IRS oppression.

Well, hardly. The rules are quite complicated. Still have to pay foreign income for years afterwards even if one tries that.

Quite frankly, I have global fiscal businesses. The IRS is not even close to being the most oppressive. In fact, in some ways, the USA is a tax haven (if you have the right accountants).

klsallee wrote:

zif wrote:

"So, atomheart was only partly correct . . ."

No, he was right on. He said in his original post, "Hungary does tax worldwide income, unless you have a second citizenship or there is a tax treaty between the two countries."

Good grief. Read what I quoted.

avoid having their domicile or "regular place of abode" in Hungary

Second citizenship AND no domicile in Hungary. He missed the second part. That is, the person has to actually declare residence abroad. Officially. In Bolivia, for example. Not just "hang out" in Bolivia for a year (with some expat make believe belief taking a weeks vacation in Rio sets back the "tourist clock" in Boliva).

Yes, exactly.  Strangely enough I faced this once when I left Hungary the first time. 

Mrs Fluffy and I tried to tell officialdom we had left but we couldn't actually find anyone to declare it to!  There was no official way to do it.

Interested to know if anyone was able to "deregister".

klsallee wrote:

fluffy2560 wrote:

Many US citizens renounce to get out from under the IRS oppression.

Well, hardly. The rules are quite complicated. Still have to pay foreign income for years afterwards even if one tries that.

Quite frankly, I have global fiscal businesses. The IRS is not even close to being the most oppressive. In fact, in some ways, the USA is a tax haven (if you have the right accountants).

Isn't it several thousand a year?  I read some numbers like that.  We've got many well known people in the UK who are US/British citizens.  From what I read, they've renounced. Even our Foreign Minister had to renounce his US citizenship.  I think he was able to do it quite fast.

One of my former colleagues was born in Boston, USA but never actually lived there for any period of time (was a baby when he left) and also held British citizenship.  He stopped going to the USA because of the hassle he used to get on entry with his British passport.  He was really struggling to renounce his citizenship but he passed it on to his kids first, then tried to do it.  Don't remember what happened in the end.

Of course there are tax havens, and you can get tax haven passports. I think the message is, Hungary did not want to go that route.

Further, there's no real comparison between a Caribbean tax haven passport and a EU Hungarian passport.

fluffy2560 wrote:

Even our Foreign Minister had to renounce his US citizenship.

You mean Boris? Yes. He did. Finally. Why not sooner? Even though he complained about it over a decade ago. Whatever.

Need I really comment more about Boris?

klsallee wrote:

fluffy2560 wrote:

Even our Foreign Minister had to renounce his US citizenship.

You mean Boris? Yes. He did. Finally. Why not sooner? Even though he complained about it over a decade ago. Whatever.

Need I really comment more about Boris?

Boris is not really of this earth.  Yes, I meant him.   He got clobbered for capital gains on his house sale.

People think of him as cute, cuddly, erudite and funny but absent minded.

Just what you want for a professor but not exactly the right chap to be facing down tough cookies.

Still, no-one can deny his popularity.

zif wrote:

Of course there are tax havens, and you can get tax haven passports. I think the message is, Hungary did not want to go that route.

Further, there's no real comparison between a Caribbean tax haven passport and a EU Hungarian passport.

I think the issue is visa restrictions - those passports with maximum travel opportunities are good news for certain  people.  As for EU passport, with sufficient cash, you can have a Maltese or Cypriot passport, both of which have some haven type advantages.  And both EU as well.

Let's see how quickly Megan Markle gets a British passport - about 5 minutes after the ring goes on.  I think she'll probably have to renounce as well but maybe not for some time. I cannot see the IRS chasing her down and Treasury agents putting the cuffs on.

fluffy2560 wrote:

People think of him as cute, cuddly, erudite and funny but absent minded.

it's an act. He knows exactly what he is doing.

fluffy2560 wrote:

Still, no-one can deny his popularity.

Not popular enough to be re-elected mayor of London apparently.

Current position is mostly based on party connections and some "support" in the party system for certain ideologies (that are not working out too well from my reading of Brexit negotiations so far). Even so, his position, from my reading from commentary, is designed to also "get him out of the way".

Else, being popular can be misleading. Popularity can be for a vast number of reasons. People can just like a show. A showman, there is, I do admit. But that does not impress me much.

fluffy2560 wrote:

zif wrote:

Atomheart is right, Hungary is a special case...

It's not really such a special case. It's pretty much the same as elsewhere. 

Don't forget the authorities can simply say you are resident and it's up to you to prove otherwise.  Not an unusual power.  The only way to know for sure these rules is to examine the tax laws in detail but even then, the interpretation may surprise people when applied "in the field".

If the Hungarian does not have assets in Hungary (such as a place to live - goes to residency), then there's no way to enforce it or indeed know what the overseas Hungarian is earning - unless self-declared or CRS or simply applying an asset or wealth test.

You're talking about the practicalities of enforcing the current laws (where Hungary is very different from most countries since the 2012 changes), that's an entirely different story...

klsallee wrote:

fluffy2560 wrote:

People think of him as cute, cuddly, erudite and funny but absent minded.

it's an act. He knows exactly what he is doing.

Oh yes, for sure.  He ruffles his hair before he goes on stage.

klsallee wrote:

fluffy2560 wrote:

Still, no-one can deny his popularity.

Not popular enough to be re-elected mayor of London apparently.

I think he decided he wanted to be in Parliament and didn't make much of an effort towards the end.  In the UK system, to be a minister you have to be in parliament.  It's not a "job" as such like here or the USA.  It's pretty certain he'll end up as PM although he screwed up over the jailed  BBC person in Iran. But they've forgiven worse!

klsallee wrote:

zif wrote:

"So, atomheart was only partly correct . . ."

No, he was right on. He said in his original post, "Hungary does tax worldwide income, unless you have a second citizenship or there is a tax treaty between the two countries."

Good grief. Read what I quoted.

avoid having their domicile or "regular place of abode" in Hungary

Second citizenship AND no domicile in Hungary. He missed the second part. That is, the person has to actually declare residence abroad. Officially. In Bolivia, for example. Not just "hang out" in Bolivia for a year (with some expat make believe belief taking a weeks vacation in Rio sets back the "tourist clock" in Boliva).

Yeah I thought it was clear from the context that I'm talking about the case when you residence is abroad.

Edit: I thought having residence abroad also implied that you don't have any registered domicile in .hu...

atomheart wrote:

....
You're talking about the practicalities of enforcing the current laws (where Hungary is very different from most countries since the 2012 changes), that's an entirely different story...

All EU countries are aligned to the OECD models and pretty much all tax systems are operationally the same.    The details might be tinkered with but they all have the same design features and in many places the legislation is pretty much the same element wise as well.  Yes, different language, different paragraphs and policies but the same effects. 

Hungary is not that different from other countries at all.  I didn't really look at the 2012 changes but if anything, I expect they brought it into greater alignment than divergence from the EU standard models.

atomheart wrote:

.....

Edit: I thought having residence abroad also implied that you don't have any registered domicile in .hu...

Now here's a question that many ponder.

What's a residence and what's a domicile?   

There is a large difference and there's confusion in the terms.  It basically depends on what they (the authorities) say it is, vis-a-vis, here's what the UK describes it as (YMMV according to jurisdiction):

Your domicile's usually the country your father considered his permanent home when you were born. It may have changed if you moved abroad and you don't intend to return.

and then:


Whether you're UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

You're automatically resident if either:

    * you spent 183 or more days in the UK in the tax year (my note: this is the OECD model)
   
     * your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You're automatically non-resident if either:

    * you spent fewer than 16 days in the UK (or 46 days if you haven't been classed as UK resident for the 3 previous tax years)

    * you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

So basically it's a complex mixture of what you own property wise, if you have access to it and not just the total days in country but also frequency of time in country. 

Just to make it even more weird, if you fly into the country and leave before midnight, this is not counted as a day for residence either. There are some very wealthy people who live in Jersey and fly into the UK 3 days a week by private jet and clear off back home before they become tax pumpkins. 

As for Hungary, I expect the residence test is - as in Boris Becker's case - having a permanent place to stay (not a hotel), even if you are sleeping on the sofa or on the floor.  This would be in line with many European countries with Roman law/Napoleonic code.

Well dear friends, after just under a year of waiting, I received notification from the local consulate that my Citizenship has been verified. I am a Magyar! Heading in to apply for my passport in early September. Hopefully most of the Birth Certificate registration, etc, will have concluded by then. Budapest declared me Hungarian in mid July.

This is great news. It not only affirms my heritage, which I find incredibly interesting, but I'm looking forward to all the benefits available to me as an EU citizen, something that is frankly, spectacular.

So, I can conclude, empirically, that my father's fleeing Budapest in 1956 did not result in a revocation of his citizenship, even temporarily, and that I, though born in Canada, am indeed a Hungarian citizen.

Note, there was no language requirement because it was based on direct blood verification, and was not "simplified naturalization."

Well Mark congrats to you and finally after your long wait well received I bet.

Hello Mark,

Both of my parents fled Hungary in the uprising to Canada, via Yugoslavia. I was born in Canada
but have lived in London, UK for many years now. I applied for Hungarian citizenship and received
it about 1.5 years ago. Once I submitted the papers, it took nearly a year to hear back and receive
my citizenship.

Being '56' ers did not disqualify their citizenship. I had to ask my cousin who lives in Hungary, to
get copies of their birth certificates and wedding certificate and provide my father's death certificate,
as he had passed away by the time I applied.

I hope this helps!

best wishes,
Klara

I left Hungary in 1956. I bought an apartment in Budapest 1111, Zenta utca 1, planning to retire there Can I get a Hungarian Passport issued?

If you were born in Hungary, to Hungarian parents then you are Hungarian. If you are Hungarian then you can have a Hungarian passport. Just make sure you get your paperwork together with proof of your lineage. You probably speak Hungarian if you were born there but even if you don't you are still eligible without any language requirements.