Registering as self-employed freelance in Hungary

I'm considering moving to Hungary, spend part of the year there and register as freelance self-employed there due to its moderate-income tax of 10%.

I'm wondering how difficult it is to register and start operating as freelance there.
I got some questions :)

- How much bureaucracy is involved to get things done?
- Is it convenient to hire an accountant?
- How much does it cost an accountant there?
- Is it easy to get a VAT ID, as I plan to invoice customers from other EU countries?
- How easy is it to open a bank account there?
- Are there any other taxes involved? E.g: if I invoice 1000€ (VAT free), would I get 900€ net profit?

Any help would be highly appreciated :)

tomthenomad :

moderate-income tax of 10%.

A bit of a myth. For a few reasons. First the 10% is (was) referring to company tax. Not personal tax. For example, you forget about required social taxes you are also liable for as an individual. Also see:

https://en.wikipedia.org/wiki/Taxation_in_Hungary

Company tax is now 9%. But then you have to have a company. You must pay a lawyer to set up your company. And you have to have an accountant for any company (20,000 to 30,000 HUF a month, or more). And if you have a company, you are an employee and you get hit with both the company tax on profit, and the personal income and social taxes on your income (32.5%).

Alternate is KATA. Flat monthly rate. But then you also don't get any deductions.

Thanks [at]klsalee! I'm interested in exploring KATA legal figure. What are the total taxes there? I'm asking because it's not simple to find out what's the total cost, considering all the different taxes they apply.

I'm looking for an easy way to operate with a low bureaucracy burden and simple setup.
Paying up anything between 10% - 16% of total taxes is fine for me, but more will make me reconsider a different country.

I know of no place in Europe where you will pay 10% or 16% on personal income taxes.  That is Europe. Not really a small business friendly space.

Tax wise, I can but recommend in Europe either Switzerland (lived there, and had a business there) or immigrating to the USA (where I am a citizen). The pay as you go tax system is much better in the USA than anything you will find in Europe.

But... Sadly... due to politics, your changes of getting into the USA are limited, unless you are the parents of the President's wife,

https://www.theguardian.com/us-news/201 … -migration

Your avatar says you are from Spain. Why limit yourself to a country that does not speak Spanish. So many countries around the world speak Spanish. The world is your oyster. You can bill EU client on line form Argentina as easily as from Hungary, but you would not have to deal with with Hungarian linguistic silliness. Maybe rethink your priories. Your needs. Your expectations. Just saying. From another fellow traveler.

Thanks for the reply and ideas!

Long story short, I can't move from the European continent for several reasons. Georgia is the most faraway country I would consider to live.

I agree it's definitively hard to pay low taxes in EU where socialism and large gov spending is pretty much everywhere. At least as a freelance legal vehicle, it's hard to save in taxes (companies have more interesting options).

Czech Republic apparently has a flat tax of 15% for sole traders up to €66k/year, which is interesting, but I suspect that does not include social contributions and so on. I also found that in some countries you can pay 15% or less in taxes if you don't make more than €12k-€15k per year.

It's curious you mentioned Argentina, which is quite a tax hell and near a failed state. They have recently introduced restrictions to move money out from Pesos to USD, so people there have literally the money blocked by its government and exposed to high inflation rates, something unfortunately common across South America. I know this because of direct friends living there.

I'm pretty much open to stay in any country, preferably near to the Mediterranean because of the good weather and typically cheaper lifestyle. Just trying to find a not bad one to legally earn money, tried to not get robbed so much and finance my modest nomad life.

tomthenomad :

Thanks for the reply and ideas!

Long story short, I can't move from the European continent for several reasons. Georgia is the most faraway country I would consider to live.

I agree it's definitively hard to pay low taxes in EU where socialism and large gov spending is pretty much everywhere. At least as a freelance legal vehicle, it's hard to save in taxes (companies have more interesting options).

Czech Republic apparently has a flat tax of 15% for sole traders up to €66k/year, which is interesting, but I suspect that does not include social contributions and so on. I also found that in some countries you can pay 15% or less in taxes if you don't make more than €12k-€15k per year.

It's curious you mentioned Argentina, which is quite a tax hell and near a failed state. They have recently introduced restrictions to move money out from Pesos to USD, so people there have literally the money blocked by its government and exposed to high inflation rates, something unfortunately common across South America. I know this because of direct friends living there.

I'm pretty much open to stay in any country, preferably near to the Mediterranean because of the good weather and typically cheaper lifestyle. Just trying to find a not bad one to legally earn money, tried to not get robbed so much and finance my modest nomad life.

The EU has a minimum tax to stop one country taking on others in an "unfair competition".  It was one of the threats used against the EU by the UK during the early days of Brexit.  VAT is the same.  Minimum amount.  Hungary has the highest VAT in the EU at 27%.  Very painful.  It's cheaper on expensive items for us to drive to Vienna and buy stuff there as VAT is 19% so there's already an 8% price advantage.

You might want to consider somewhere like Malta.  There used to be a tax incentive there for expat workers but you'll be stuck on an island which could be hard to get off. One of my friends was living there but eventually he left. 

Further away, another one of my ex-colleagues was in semi-retirement and went to live in The Philippines in the area around the former Clark Air Force Base. It had excellent tax exemptions and medical facilities.  But he had loads of money and no kids.  Last I heard is that he moved to Malaysia as it was even cheaper.    You could try Micronesia or say Palau.  I believe taxes are quite low but getting there is quite difficult. 

There's always Svalbard for strangeness and polar bears.

YMMV!

Check out Bulgaria and Russia, I have some vague info according to which the total tax rate is around 10% or less. But again, I might be totally wrong...

Paraguay supposedly has a 10% tax rate for freelancers, when your income comes from abroad.

In Hungary with KATA you pay a monthly 50 000HUF and that covers almost everything til you hit a yearly 12 000 000HUF. Above that there's 40% for the part above 12 mil. And you need to pay about 50 000HUF/year as the local industry tax, 5 000HUF for the chamber of commerce membership. And would be a good idea to have an accountant around, one that doesn't speak english costs between 5-15 000HUF per month...

Thank you! I'm exploring Bulgaria now. Hungary seems doable if total taxes below 12M HUF are something around 10%-15%.

atomheart :

Check out Bulgaria and Russia,.

Corrupt oligarchies. Which inject other issues. Including fiscal. Which I will not list but any rational thinking person can surmise who has spent any time in such countries. And your business will have that country as its source. Depending on what you do, and who who sell to, that may be a bad or good, and depending on who you sell too and what you sell. For example, when living in Switzerland, my Swiss registered based business had a heck of a lot more interested clients than Hungary. I actually LOST business moving to Hungary. Yes, it is BS. Same business. Simply sifted a bit East. But that is client psychology .. it is not always rational. Just saying. Think about it. Location does mater. As reputation. And reputation does matter. And reputation, right or wrong is tied in many people's mind to geography.

klsallee :

I actually LOST business moving to Hungary.

Side note:

I like living in Hungary more than I liked living in Switzerland.

Not everything IMHO is about money... Again, just saying.... It is complicated. To each their own. You need to find the balance that works for you.

tomthenomad :

It's curious you mentioned Argentina, which is quite a tax hell and near a failed state. They have recently introduced restrictions to move money out from Pesos to USD, so people there have literally the money blocked by its government and exposed to high inflation rates, something unfortunately common across South America. I know this because of direct friends living there..

Kudos to you for knowing that. I did not. I simply pulled that country name out of a hat not knowing the particulars. as I more trying to make a point that the Spanish speaking world is larger than the Hungarian speaking  world. That is was intended to be a generic comment. My fault for mentioning specifics.

So again, given what I wrote post explanations and without edits, you win. I loose. I loose badly there.

Plus one Internet point to you. Minus one Internet point to me.

Kudos to you. Hats off you to you or knowing more about Argentina then me. You win. Hands down. I bow to you. I loose.

But....As an aside.... Who do you think knows more about Hungary..... Me or you? ** :cool:

**Side note: Okay, that is maybe a false dichotomy question. Maybe Atomheart........   :lol:

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