Living in Hungary or not

I mentioned the topic before, whereas we like Hungary and the place we live, we see things going into a direction of the EURO acceptance. (This is I think good for the price of our property but not so much on favor of cost of living, we have time and there is no immediate urgency. There are friendly people everywhere (currently looking at Georgia and Turkey).

I really do not know what to do, but if we can sell (once things with Corona are over), we might as well benefit from Hungarians wanting to escape bigger towns (ie paying for our home).
Of course the whole Corona situation makes our life a bit depressive, but I assume (perhaps naive) that things will get back to (relatively) normal in 1 years time.
Philosophical, life is there where you live and you can create your life there. My wish is safe and relatively comfortable. (Health of course is difficult to direct in any country). I can worry on neighbor disputes, finances, cost of maintaining (in case health does not allow). Bottom line if married (or in a relation), this has to be good, health is an extremely big factor as well and (many people will disagree) are finances.
I realize we are lucky to still have the option of moving. I know quite some people in our neighborhood who have no option at all.

One sad example is a very clever Hungarian woman (who also spoke German) who had (a deceased) husband who decided to build (admittedly) a big nice house. (However there was a mortgage). This can go fine for a number of years, but sooner or later the bank will take it back and the neighbor ended up in a horrible situation. (Having said that on a relative basis the social security system (for many) is not too bad. Still a very sad story. (Now a house of EUR 5.000 rather than EUR 200.000).

We have seen massive salary increases in Hungary over the last years (which for Hungarians is good), but we also notice it a bit. Once the EURO is there it will take just a few years to come to price levels of Western Europe (which we can not afford with our style of living).

Bottom line, we like living in Hungary, but I foresee things become too expensive. My last years I prefer to spend in relative comfort (either here or perhaps somewhere else).

cdw057 :

I mentioned the topic before, whereas we like Hungary and the place we live, we see things going into a direction of the EURO acceptance. ...

One sad example is a very clever Hungarian woman (who also spoke German) who had (a deceased) husband who decided to build (admittedly) a big nice house. (However there was a mortgage). This can go fine for a number of years, but sooner or later the bank will take it back and the neighbor ended up in a horrible situation. (Having said that on a relative basis the social security system (for many) is not too bad. Still a very sad story. (Now a house of EUR 5.000 rather than EUR 200.000).

I didn't get the point of this.  You're saying she didn't have money to pay the mortgage and was reliant on the social security for income?   

Hungary's economy is not in that great a shape. 

The Euro isn't coming here anytime soon and if it does, this would mean more control from Brussels which OV wouldn't like.  He'd have no control over interest rates or quantative easing. Moreover he's going to be potentially sanctioned if the rest of the members weren't so lily-livered.   They've got to deal with Poland as well.   I cannot see Hungary getting kicked out despite all the noise OV makes.  There's no chance a referendum will say leave.

Moreover the Euro needs far tighter economic conditions than there were when say Greece was admitted (and fiddled its books).  The bill for COVID19 is not in yet either.  Don't see it coming to Hungary for the moment.  Maybe in 10 years but by then Serbia, Montenegro and maybe Albania will be in but maybe not North Macedonia. 

In 40 years, perhaps even the UK will come back but I doubt it - there will be 3M ethnic-Chinese back in the UK from Hong Kong and they'll turn the place into Singapore and the UK won't care.  Well, fingers crossed anyway.

cdw057 :

but I foresee things become too expensive.

Becoming? How? Can you explain?

For example, most retail goods are already at EU prices, in fact higher due to the high VAT here. If there is a big ticket item to buy, it is already now cheaper to sometimes drive to Austria and buy there --- just to save on VAT. Not to mention the "from Budapest" distribution network adds to costs to many items for those in the country side. Moving to the EUR will not change that, or cause any real increase in prices. If anything, it may be a benefit for direct comparison of prices around the Eurozone.

Due to government wanting to get votes, power costs are pretty cheap here for us. My annual property tax bill is basically less than my monthly food bill. It can be very cheap to live here if one owns their home in the right place.

So what exactly are you spending money on that is expensive? Maybe you are being taken for a ride by some locals who are "helping you" and paying more than you should.... It is to consider as I know other expats who had that happen to them. Con artists are often the most friendly of people while you pay them..... :)

But also... Hungarians no longer feel they need to be giving Gold Level Service, for the price of Nickel..... The days of foreigner exploitation are over. ;)

cdw057 :

My last years I prefer to spend in relative comfort (either here or perhaps somewhere else).

Well, I guess that is a mater of opinion what is "comfort". My house here is rather small (90 sq m living space), but comfortable, and is still larger than any apartment I had in the US or Switzerland (both very comfortable, but were costing me far more). In fact, for me (and just me) a large house is a waste of money unless you have a large family. It is a lot of wasted space to heat, repair, manage, fix, etc. etc. etc. A large house is a hole in the ground you pour money into, and you can never be in more than one room at a time so what is the point?

And the climate here is nice by the lake. We spend more time outside than inside most months of the year. The "real" large house here is the outdoors. :)

cdw057 :

There are friendly people everywhere (currently looking at Georgia and Turkey).

Well.... Have you ever lived in a very corrupt society where the friendly people expect you to pay them to be friendly..... and you get into all sorts of "issues" if you do not (especially those in an "official" position). Or the local crime rate. Etc. Those are also costs you may need to consider. Just saying..... :)

And consider the climate... it can get pretty hot in parts of Turkey. If you are not used to hot weather.... also consider that.

Indeed, there was a mortgage and interest payments were too big too cover, capital was near zero (or even negative).
Personally I do not like to be in debt, but difficult to make a cut from the past.

As for things becoming more expensive in Hungary, I unfortunately do smoke and drink massively (both have seen considerable price increases over the last few years).
I mention Turkey and Georgia (Georgia I think has very little corruption, in Turkey they really try to facilitate expats). Again Hungary is not too bad at all (actually quite good), but sooner or later budget has to be balanced, taxes for pensioners, wealth (property) taxes, have to be imposed.

The massive salary increases over the last years (which are partially offset by inflation) will (and are) visible in prices (restaurants, prices for workmen, grocery prices etc.) As soon as the EURO comes the inflation offset as compared with Western Europe will not be possible anymore. Still for Hungary there is a big interest to become part of EURO zone.

Yes I pay too much for workmen (I will do so everywhere), I pay for being a foreigner, I pay for people being on time, I pay for people to be friendly, having said that it is a small part of budget, the spending mentioned before takes a bigger part. Of course not being part of the EU (or for that matter Schengen zone) has its drawbacks as well.
If I can sell my house with a good profit before increased cost of living kicks in I will do so. Having said that with Corona running I will only consider in a year or two.
Hungary is a good country to live in (I just worry on the future).

cdw057 :

Indeed, there was a mortgage and interest payments were too big too cover, capital was near zero (or even negative).
Personally I do not like to be in debt, but difficult to make a cut from the past.

Maybe she should have scaled down her ambitions.   Maybe she was caught up in the CHF (Swiss Franc) mortgage debacle.  I feel the same about debt.  Best to have  none. 

On a similar theme, we tried to pay our electricity bill here in advance and couldn't.  They sent us money back.  I wanted to just pay it like 1 year in advance (with the adjustment at year end).   They said it messed them up.   As I had the money I thought I'd just pay it.  They didn't like it.

I think it was more a topic of putting your head in the sand and ignore the topic from existing, we did mention it once or twice and indeed the topic did not disappear, still putting your house up for sale in a village where you lived comfortably for 30+ years is not easy to do. Her husband was a famous builder but overstretched a bit (or more then a bit) financially.
I really feel sad.



On the other topic of paying utility bills, I really do not understand how things work, I just align with what is being sent, we indicated at the start that we would prefer to pay once per year (making online payments in Hungary is quite expensive (or perhaps I have just the wrong package). At the start things went fine, although for water we received monthly invoices (nowadays once per quarter we receive 3 at the same time (I just pay them in one global amount mentioning my client number). For electricity it is once per year (in my budget I just reserve the amount rather than paying upfront). For gas it worked at the start, then a few years with quarterly invoices but I think they are back to annual (in any case last time).
For garbage collection one invoice per quarter/

Pre-paying is something I like to do myself and eg phone companies are happy to deal with it. (for phone I use e-phone), I paid a massive amount 5 years ago, but it is so cheap that I still call from that balance. Also my council is happy to take payments upfront and monitor the balance.

By the way, even if water is the smaller invoice of utilities, they come and check once per two or three months, for electricity and gas once per year (or even less).
Chimney checking do not cost but are important for home insurance (max 1 x per year (you just have to get lucky or ask), they were here last year, but definitely not in all the years we lived here.

Curious on experiences from other members.

Turkey? From what I gather from the news involving Erdongan, doesn't feel like the country would become any more westerner-friendly...

"(making online payments in Hungary is quite expensive (or perhaps I have just the wrong package)."

It's free with most hungarian debit cards.

" I unfortunately do smoke and drink massively (both have seen considerable price increases over the last few years)."

Serious question, have you considered giving up at least one of them? If you can't do it on your own, seek professional help..?

My neighbours are Turkish, you really don't want to live there. Maybe its fine to go for a holiday, but living there is somethings else.

Life works out or it doesn't.
Can't control the future.
I now believe it is possible that the entire world is under huge changes.
Euro, Forint or Dollar, doesn't matter, it will all come crashing down if this C-19 thing is allowed to take over every action of every country.
Have you actually visited and spent time in Turkey or Georgia?
Maybe it could be your worst mistake ever to move to either of these places?
Heard that over 30% of the people in Las Vegas, both renters and home owners didn't make their payment for the month of June, No money coming in.
People are still waiting to file for unemployment benefits, no income for months for some.
Right now is not really the best time to make a major change since the future everywhere seems a bit bleak at the moment.
We planned on visiting SE Asia finally this fall, plans on hold, who knows might never be in the cards.
All good though, out of our control.
Best to focus on things you can control like your health and mental state.
I thank God most of my life is over with and I am not a young child having to deal with whatever new system is coming, it's coming you can see it, feel it and just about taste it.
Nothing is ever going back to,"normal" again. Changes are here and not going away, it was far too easy to send everyone to their room for a time out. Those powers that be will not give up all that power and allow us to go back to normal ever again.
They needed a huge crisis to make their back door deals and do their power trip on us.
We are nothing to them and the sooner we realize that the sooner we can take control of at least our way of dealing with it and not allowing it to ruin the little peace we still have.
Be grateful for what you have and don't worry about tomorrow, it may never come.
PS, This is me in a good mood...
Good vs evil, good wins in the end, no fear.
People tend to put too much of their energy into owning things and getting "somewhere" in life.
It can all be taken away in a flash. Best to enjoy what you have and don't get caught up in money.
If you are older then it is really silly to worry about getting ahead and being something or someone.
I am not wise, I'm a fool like everyone else but I have had many experiences.
Had tons of money for a few years, so much that I spend like a fool on dumb things and didn't think twice about it. Rather strange as I never came from money.
Now we are "comfortable" not rich, don't care a hoot about it either.
We actually look poorer then we are and don't think twice about it.
I have put away my fancy rags and diamonds and have made my life more simple.
Even with this C-19 thing I have been growing my hair long , very odd thing for me to do as a ex-hairdresser who always was up on fashion trends.
Now it not the time for vanity or big changes. You actually should be taking advantage of living in an area where you can grow your own food.
Not everyone though is able to live in a village, most people need to get to work so I wouldn't hold my breath on prices going up in the countryside, if that happened the city will also have price increases on flats.
We were looking into buying something out of the city but for now we think prices will crash everywhere sooner or later. I really don't care one way or the other about making a profit on anything.
Lived long enough in this flat we own to have already broken even if I had been paying rent all these years.
If your property is paid off count yourself blessed and don't worry about getting more or better.

SimCityAT :

My neighbours are Turkish, you really don't want to live there. Maybe its fine to go for a holiday, but living there is somethings else.

Yes, my sister visited Turkey with her UK husband and another couple back in the late 60's. She couldn't wait to leave, was afraid to close her eyes to sleep while there.
Personally I love Turkish tv shows but dang,if even half of the shows were based in reality, it is a rather dark, scary place with high crime.

It is of course me, but smoking drinking makes my life easier to accept, one could say addict, one could say soft addict, still I care about my wife and our animals (no children (many people may and are frowning on that, but that is how life is).

Smoking and drinking might (and probably have) many negative effects, however during these (Corona) times some conflicting messages evolve.

I do not know it is because of the above (probably not), but my blood pressure is almost perfect, weight is (too) good (79 kg, 185cm), perhaps through style of living (avoiding sugar at almost at all cost (horrible sensitive teeth).
What is good or not good is not always easy to determine (when I was young I was allowed only 1 egg per week (we had 5000 (!!) chickens at home (at the time not probably not properly cared for)); since then views on (weekly or even daily) intake of eggs have changed quite a bit.

I suspect not but I would not be surprised if smoking would actually prove to be a good thing.
Still if I die of a heart attach due to smoking it is good for society (saving pension payments) (not for me though, I want to live (in comfort of smoking and drinking (contradiction?)).

One might say I am crazy. addict or drunk writing this, but it is my view.
At this this I am not seeking help, dying from a heart attack at 70 is not too bad I think as to compare of a life long dependency on hospital treatments etc. (I know some people of 90+ being vivid and not considering a healthy life style, but also some people of 50+ (just) struggling all the time (genes I think are most important in having a healthy life)).

First topic for me, I am extremely happy that our property has been paid off and I feel relatively comfortable that me and my wife in any case can eat (and drink water) until we die (however I prefer something more than that).

Also I agree that there will be a (property) crash, although on a relative basis rural properties will do fine I think in the (near) future (grow your own food being one of the reasons, but also getting nuts in an apartment of 50m2 with 5 people).
Hungarians returning home will also help.

On the past, I have made my decisions, some good, some bad, but I am still alive, I had a very good job, very well paid, but I decided to go for a laid back easy life, was it good or bad to do so? Happy to be alive in relative comfort, but I will try not to ignore what is going on in this world (or country).

Being in your 70's is still young.
Never give up the fight!
My husband loved to smoke the weed for a very long time, didn't help that we lived in Hawaii .
He is now 73 and doesn't smoke anything or drink, I force him into taking pumpkin oil, flax seeds and eating oatmeal every few days.
Make him herbal teas and force him to eat green salads, as a HU he isn't too much into eating "goat food" as he calls it.
I tell him he is an old goat so eat up!
Last week he started taking some CBD oil, met the growers, no THC in it just the hemp oil.
I enjoy my wine, for decades I didn't drink anything ever or smoke anything either.
Took my role as a mother seriously and was far too busy to find time to hold a cig or relax enough to drink.
Nothing wrong with not having children, out of the 6 of us only 3 of us had a child and even so only one each.
Our son is 44 and no grandchildren in sight yet, don't think there will be ay at this rate either.
All good, selfish me, one less thing to worry about. I'd be a mess if I was worrying about grandchildren right now.
My sister is 72 and single never had children, She keeps herself busy with part-time work and volunteering at the zoo.
She cares for an elderly couple by shopping for them and was cleaning their apt. before C-19. Now she can't enter the building.
She is getting elderly herself but doesn't consider herself old.
It is a mental thing after all.
Our son moved to Japan last year, might never see him again if things get any more insane with the world.
All good, have to live with whatever is in the future.
It isn't always fun to think about the past and what could of been but being in your 70's and still kicking it one has to be grateful.
I lost 2 of my good friends within 3 months of each other recently. Knew them both for over 50 years. Never going to find a friend like them ever again.
Life is full of changes, not all of them good but like they say, where there is life there is hope.
Yes, we are lucky we have no major bills like rent or mortage to deal with or small children to worry about.
The media is spreading a ton of fear so less time listening to the media and more time out in nature and the better off we all will be.

cdw057 :

On the other topic of paying utility bills, I really do not understand how things work

Paying online from an HUF account does not cost. If you are paying from a foreign currency account, then costs can add up.

This is how you "pay annually" online and cheaply in Hungary:

Open a HUF account at your bank. Refuse the debit card (that costs and this account should only be for online payments). Since most utility bills are the same each month, log into your online account for that HUF account, and set up automatic monthly payments for each creditor. Then put all the funds into the account needed for the year. You are done. Ignore the account for the next year. Your payments are taken care of for the next year. And since you have no debit card which may easily leak funds, it is like you "already paid it".

cdw057 :

The massive salary increases over the last years (which are partially offset by inflation) will (and are) visible in prices (restaurants, prices for workmen, grocery prices etc.) As soon as the EURO comes the inflation offset as compared with Western Europe will not be possible anymore. Still for Hungary there is a big interest to become part of EURO zone.

When Hungary entered the EU, this was to be expected. The EU provides a lot of funding to help local economies become on par with other EU countries. My only "shock" was it took longer than it should have, and  still not up to par with other western EU countries yet.

That is, all this was expected and was designed and intended to help Hungary and Hungarians gain western European on par income levels (there will be always local variations of course).

If you want to live "above" par to the locals, given a "normal" EU salary, than, yes, you probably need to move outside the EU. Because the EU was never intended to create pockets of cheap living spaces for western expat citizens in perpetuity.

And even so.... One does not need to move to Turkey to live cheaply. For example, if one lives in Heviz one should know that is one of the most expensive places in Western Hungary to live. Simply consider moving to a less expensive area in Hungary. There are still plenty. And they are just as nice.

I think it was more a topic of putting your head in the sand and ignore the topic from existing, we did mention it once or twice and indeed the topic did not disappear, still putting your house up for sale in a village where you lived comfortably for 30+ years is not easy to do. Her husband was a famous builder but overstretched a bit (or more then a bit) financially.
I really feel sad.



On the other topic of paying utility bills, I really do not understand how things work, I just align with what is being sent, we indicated at the start that we would prefer to pay once per year (making online payments in Hungary is quite expensive (or perhaps I have just the wrong package). At the start things went fine, although for water we received monthly invoices (nowadays once per quarter we receive 3 at the same time (I just pay them in one global amount mentioning my client number). For electricity it is once per year (in my budget I just reserve the amount rather than paying upfront). For gas it worked at the start, then a few years with quarterly invoices but I think they are back to annual (in any case last time).
For garbage collection one invoice per quarter/

Pre-paying is something I like to do myself and eg phone companies are happy to deal with it. (for phone I use e-phone), I paid a massive amount 5 years ago, but it is so cheap that I still call from that balance. Also my council is happy to take payments upfront and monitor the balance.

By the way, even if water is the smaller invoice of utilities, they come and check once per two or three months, for electricity and gas once per year (or even less).
Chimney checking do not cost but are important for home insurance (max 1 x per year (you just have to get lucky or ask), they were here last year, but definitely not in all the years we lived here.

Curious on experiences from other members.

klsallee :
cdw057 :

On the other topic of paying utility bills, I really do not understand how things work

Paying online from an HUF account does not cost. If you are paying from a foreign currency account, then costs can add up.

This is how you "pay annually" online and cheaply in Hungary:

Open a HUF account at your bank. Refuse the debit card (that costs and this account should only be for online payments). Since most utility bills are the same each month, log into your online account for that HUF account, and set up automatic monthly payments for each creditor. Then put all the funds into the account needed for the year. You are done. Ignore the account for the next year. Your payments are taken care of for the next year. And since you have no debit card which may easily leak funds, it is like you "already paid it".

They sent all the bills in advance which we're supposed to schedule for payment.  But we just paid them in a lump.  Then they complained and sent the money back.   You'd think they'd like that free loan.  In fact, they should give us a discount for substantial payment in advance!   

BTW, in my area we get gas/electricity quarterly, water and car tax bi-annually, phone/internet monthly.  I'd prefer to just pay at least the phone/Internet and water a year in advance.

When we would visit the US for 6 months or longer, we always went into the utility co. and told them to stop billing because we would be gone. They never shut off the service and we did pay a small fee for every month for the accounting dept.
The cable we just turned off stopped the service.
This last time we were going to shut off the cable but they talked us into a cheaper rate for the same service so we just paid for the 6 months we were not using it. I liked this better, such a pain to arrive back in HU and have to wait a week or so for internet again.
We always paid up front for our Taj card that was a big one to pay at once for up to a year each.
We pay sometimes 4 months ahead of time for our common costs on our flat, just hate to owe anyone anything
Do our bills by paying cash at the post office before they are due.
I notice though sometimes they sent out a "check" bill , that is due within a few days time.
Guess they don't charge much in late fees?
No idea since we usually run over straight away and make sure it's paid.
It seems like a pain to do but we are used to it, going to the post office every week or two to pay bills...
We send in our meter readings online but pay in person.

Marilyn Tassy :

...
It seems like a pain to do but we are used to it, going to the post office every week or two to pay bills...
We send in our meter readings online but pay in person.

We do the same. 

We collect all the bills up that we have and then just take them to the PO to pay by debit card.

I don't think we've never seen an electricity meter reader in person though.  We think we have meter that reports itself back to HQ but I'm not entirely sure.  It's totally electronic.   We see the water and gas meter reading people as their meters seem to be mechanical.

fluffy2560 :

BTW, in my area we get gas/electricity quarterly

So do we. But it is always the same amount, month after month, for the year. Despite the power company sending out bills, the amounts are always the same. So setting up bank monthly automatic payments work fine. Then we get an "adjustment" in the mail to pay more if we used more that year. Just got our adjustment for the year and that I will pay.... oh, shock and horror "manually" by going online to my bank account and paying it.....

fluffy2560 :

In fact, they should give us a discount for substantial payment in advance!

So, they have an accounting system setup that may be affected by your behavior, costing them time and money to bend to your wishes and desires, and you think they should give you a discount for that?  :unsure

And if you have a smart meter, where the power company can adjust your bill every month or quarter, then you can not pay by year as you may under pay on a yearly estimate, and you thus are not helping the power company by paying less than you owe.  :cool:

fluffy2560 :

We collect all the bills up that we have and then just take them to the PO to pay by debit card.

No special trip needed to the Post office for me (useful during a pandemic). In fact, the power company does not even send us payment slips any more, since I have been paying online for years.
My wife just gets an SMS on her phone about the next three bills, which we don't even need, as the auto pay banking takes care of it. :-)

klsallee :
fluffy2560 :

BTW, in my area we get gas/electricity quarterly

So do we. But it is always the same amount, month after month, for the year. Despite the power company sending out bills, the amounts are always the same. So setting up bank monthly automatic payments work fine. Then we get an "adjustment" in the mail to pay more if we used more that year. Just got our adjustment for the year and that I will pay.... oh, shock and horror "manually" by going online to my bank account and paying it.....

fluffy2560 :

In fact, they should give us a discount for substantial payment in advance!

So, they have an accounting system setup that may be affected by your behavior, costing them time and money to bend to your wishes and desires, and you think they should give you a discount for that?  :unsure

And if you have a smart meter, where the power company can adjust your bill every month or quarter, then you can not pay by year as you may under pay on a yearly estimate, and you thus are not helping the power company by paying less than you owe.  :cool:

Interesting.  From memory, ours vary even by the quarter maybe due to rounding but more I presume that's because of the demand predictions during the year.  Maybe your company is different.  Ours is called  ELMŰ which I think is the Budapest generating company.  Our water is Budapest (Fővárosi Vízművek). Gas I cannot remember as it keeps changing - it was Tigaz.

As for payment in advance, let's think of the bigger picture. Obviously use of the cash is opportunity cost lost and it's a free loan to to the power company as no-one is asking for interest.    Multiply that up by those that opt in.

The power company strategy should be to round up or just slightly overcharge on their model costs (i.e. 4-person household demographic, age of house, type of construction) and then automatically roll over the refund amount if less than say, 5000 HUF  or if more than the limit only to make a refund on application to reduce administrative costs.

Just like everywhere, it's ideal to create cashflow to manage the ups and downs of the market day-to-day, month-to-month and year-to-year.    Assuming full integration (generator/distribution) they will be doing option deals on input resources they do not control directly (independent nuclear generators) or are outside of their control (i.e. wind).  Imagine if generating capacity was based on imports of oil like some countries.  Volatility is not helpful.  But if the price was low, you'd want to try and buy forward.   
There was a very interesting short period a while back where coil prices were negative - what a gift for those who could buy forward and had capacity.  Wouldn't result of consumer price reductions though!

fluffy2560 :

Interesting.  From memory, ours vary even by the quarter maybe due to rounding but more I presume that's because of the demand predictions during the year.  Maybe your company is different.  Ours is called  ELMŰ which I think is the Budapest generating company.

Monthly variations in cost are more likely due to you having a smart meter. Thus, you will never be able to pay in advance for a year. But you can still pay online, and avoid trips to the Post Office. Seriously... Either using a browser or an App from your bank. You can pay your bills anywhere in the world with a cell phone or computer.

fluffy2560 :

As for payment in advance, let's think of the bigger picture.

The bigger picture is companies must conform to government taxation. And getting large payments in advance affect their accounting and tax basis often to their detriment. Not to mention the human resources costs to tailor make payments that can vary for any client. From your comment I can only assume (but correct me if I am wrong) you have never run a company in Hungary (KFT or larger) that had to deal with regular client incoming bills from many many Hungarian based clients, and had to personally deal with government accounting and taxation rules and regulations in Hungary regarding that.....

klsallee :
fluffy2560 :

Interesting.  From memory, ours vary even by the quarter maybe due to rounding but more I presume that's because of the demand predictions during the year.  Maybe your company is different.  Ours is called  ELMŰ which I think is the Budapest generating company.

Monthly variations in cost are more likely due to you having a smart meter. Thus, you will never be able to pay in advance for a year. But you can still pay online, and avoid trips to the Post Office. Seriously... Either using a browser or an App from your bank. You can pay your bills anywhere in the world with a cell phone or computer.

I don't go to the PO, Mrs Fluffy does.  Unfortunately I don't trust HU banks or companies. I trust others but not HU ones.  In any case prefer to manage my own cash flow without the direct assistance of a HU bank.  Most of those are in dire financial positions. I even thought OV was going to raid bank accounts or introduce currency controls due to mounting financial problems.

klsallee :
fluffy2560 :

As for payment in advance, let's think of the bigger picture.

The bigger picture is companies must conform to government taxation. And getting large payments in advance affect their accounting and tax basis often to their detriment. Not to mention the human resources costs to tailor make payments that can vary for any client. From your comment I can only assume (but correct me if I am wrong) you have never run a company in Hungary (KFT or larger) that had to deal with regular client incoming bills from many many Hungarian based clients, and had to personally deal with government accounting and taxation rules and regulations in Hungary regarding that.....

Actually I have run several companies in the UK.  For one reason or another I gave up doing that.  Upshot was I decided it just wasn't worth the hassle when I can have a different type of working with equivalent income.

But anyway, your assumption is that payments in advance are income subject to taxation. But they don't have to be.  We can argue if they are rolling short term loans from clients.  They are assets.  They are only moved to income when expended.  This works to the company's advantage since it can determine when the income and therefore taxation is booked.

fluffy2560 :

Actually I have run several companies in the UK.

...snip...

But anyway, your assumption is that payments in advance are income subject to taxation.

First, this is Hungary, not the UK.

Second, you clearly then do not have a non-KATA business in Hungary. As what I said is not an assumption in any way. It is from dealing with a KFT in Hungary and info from a Hungarian Accountant. The government wants its taxes from any money you received in that month or quarter. In fact, a company here must pre-pay each month or quarter, then adjust if they get it wrong the next month or quarter. Thus it gets complicated when people want to "pay for a year" as that screws up their accounting. Businesses like regularity. Your demand to pay for a year in advance disrupts that (the company already paid its taxes, then you come and give them money which they must report as income and pay taxes on next month.... annoying), which is why they reject it.

Which leads to an interesting question.... Under what business are you operating to get income while you live and work in Hungary? As any competent accountant here should have told you this. Only KATA is exempt.

klsallee :
fluffy2560 :

Actually I have run several companies in the UK.

...snip...

But anyway, your assumption is that payments in advance are income subject to taxation.

First, this is Hungary, not the UK.

Second, you clearly then do not have a non-KATA business in Hungary. As what I said is not an assumption in any way. It is from dealing with a KFT in Hungary and info from a Hungarian Accountant. The government wants its taxes from any money you received in that month or quarter.

Which leads to an interesting question.... Under what business are you operating to get income while you live and work in Hungary? As any competent accountant here should have told you this. Only KATA is exempt.

I'm employed by an international concern. 

But anyway, I'm not the subject of the discussion, advance payments to the utilities (or any other business) are.   

This isn't about Hungary or the UK, it's general accounting and economics for large corporations. 

But if you want to get into it more, read about IFRS for the private sector and its derivative IPSAS for the public sector.   

The key element in IFRS is reporting. All EU is based on accounting treatments described in IFRS.

fluffy2560 :

This isn't about Hungary or the UK, it's general accounting and economics for large corporations. 

But if you want to get into it more, read about IFRS for the private sector and its derivative IPSAS for the public sector.   

The key element in IFRS is reporting. All EU is based on accounting treatments described in IFRS.

First of all.. a Wikipedia link means little. That is an ideal.

There is something more important here... which I like to call "reality".

And if you have not had to deal with running a company in Hungary (reality), and paying taxes in Hungary as a company, under local Hungarian tax man rules.... all based in reality, then you are just talking theories.

While theories are nice. I love theories. I actually have two degrees in science. They are not the same as on the ground facts from experience from people who do actually have to deal with the company tax man in Hungary.  ;)

Side note: I once lost a court case that I should have won based on "EU based" law in Hungary. Because the court basically rejected the EU law. Again... The EU, really, does not really mean much here... in reality. I could have maybe fought the case to some EU court, but by then my court costs were 3x my original loss on the issue (and four years), so I just gave up; not wanting to pour more money into the issue... also a bit of fiscal reality.

klsallee :

.... I actually have two degrees in science. They are not the same as on the ground facts from experience from people who do actually have to deal with the company tax man in Hungary.  ;)

You ain't the only one....

More importantly, I'm only saying if corporate accounts are prepared - by credible professional auditors/accountants under IFRS principles - then they are more likely to be accepted by the revenue authorities.   

It's accepted in IFRS that assets (i.e. advance payment) has to match (deferred) liabilities when they occur.  No activity has taken place to utilise the asset.    Therefore the income is booked in that period (i.e. quarter) when the asset is used and then that will give rise to tax liability.

klsallee :

.....

Side note: I once lost a court case that I should have won based on "EU based" law in Hungary. Because the court basically rejected the EU law. Again... The EU, really, does not really mean much here... in reality. I could have maybe fought the case to some EU court, but by then my court costs were 3x my original loss on the issue (and four years), so I just gave up; not wanting to pour more money into the issue... also a bit of fiscal reality.

Sunk cost fallacy methinks.  Sorry about it. 

One of my colleagues elsewhere fought some idiots in a local government over EU recognition of some L shaped pre-cast retaining wall building materials.  They didn't like them.  They were however universally accepted and approved everywhere in the EU.  The stupid thing is that they kept fighting even with faced with the use of these materials in other places in similar situations in the same country.   They kept saying they weren't approved locally.  The local government lost of course but why the hell they didn't pay attention to what went on elsewhere no-one can say.

fluffy2560 :

More importantly, I'm only saying if corporate accounts are prepared - by credible professional auditors/accountants under IFRS principles - then they are more likely to be accepted by the revenue authorities.

IFRS, or GAAP, double entry bookkeeping is still double entry bookkeeping. Paying taxes is still paying taxes. And the tax man will want to see your books.... That is what will matter.

I have worked a bit in International finance. Mostly in micro-finance. And so I have a bit of sensitivity about low income earners and how they may affect the local economy. And so, I can but suggest you may need to also maybe think of Hungary in a bit of micro-finance ways. For example, my 10,000 HUF property tax bill comes with four payment slips. Because people here can not afford to pay 10,000 HUF all at once. And companies are not stupid. They have done their research on who can pay what and when, and adjust their accounting system to serve the most "common" customer type at the lowest cost. So you, coming with a bit of a high income earner expat bubble, disrupts that system. It is simply cheaper for them to reject your payment than to process it. Just some things to think about.

fluffy2560 :

Sunk cost fallacy methinks. .

Yes. Correct.

Similar to assuming it is in a company's interest to accept a yearly pre-payment, while it may not be. It may be more costly to accept it, and more cost effective to reject it.

klsallee :
fluffy2560 :

Sunk cost fallacy methinks. .

Yes. Correct.

Similar to assuming it is in a company's interest to accept a yearly pre-payment, while it may not be. It may be more costly to accept it, and more cost effective to reject it.

Of course it's in their interest to accept it.

it's money you don't have to necessarily borrow and the chances are you're not paying interest. 

Makes your balance sheet look good - at least quarter by quarter in this case.

klsallee :
fluffy2560 :

More importantly, I'm only saying if corporate accounts are prepared - by credible professional auditors/accountants under IFRS principles - then they are more likely to be accepted by the revenue authorities.

IFRS, or GAAP, double entry bookkeeping is still double entry bookkeeping. Paying taxes is still paying taxes. And the tax man will want to see your books.... That is what will matter.

I have worked a bit in International finance. Mostly in micro-finance. And so I have a bit of sensitivity about low income earners and how they may affect the local economy. And so, I can but suggest you may need to also maybe think of Hungary in a bit of micro-finance ways. For example, my 10,000 HUF property tax bill comes with four payment slips. Because people here can not afford to pay 10,000 HUF all at once. And companies are not stupid. They have done their research on who can pay what and when, and adjust their accounting system to serve the most "common" customer type at the lowest cost. So you, coming with a bit of a high income earner expat bubble, disrupts that system. It is simply cheaper for them to reject your payment than to process it. Just some things to think about.

Think big - millions or billions.   In basic accounting terms, GAAP and IFRS are about treatment where as double entry is mechanics.  Then we can get into cash accounting (post when receiving actual money) and accrual accounting (post when notified).  Nearly all small scale companies and businesses uses cash accounting.  Government treasury uses accrual accounting.

If you have advance payment, then it cannot be income.  It will appear as (potentially) a cash asset in the accounts balanced by deferred liability. 

It's the same as shareholders financing, this must match the assets, credits and liabilities on the other side of the double entry. 

That's why it's double entry - it balances on both sides and is therefore self checking.

fluffy2560 :

If you have advance payment, then it cannot be income.

Sigh..... I give up. You continue to miss the point. Which is about local reality, not your personal egocentric needs how you think things should work here under your own terms and ideals. I rarely repeat myself, but I will here, because the world may need to see again how you completely miss the point:

And companies are not stupid. They have done their research on who can pay what and when, and adjust their accounting system to serve the most "common" customer type at the lowest cost. So you, coming with a bit of a high income earner expat bubble, disrupts that system. It is simply cheaper for them to reject your payment than to process it. Just some things to think about.

Or to put in terms you may understand, from prior posts..... despite all logic, here water may be declared to run uphill. One must deal with that local perspective and adjust accordingly. One can point out the absurdity, but endlessly complaining about absurdities is a waste of everyone's time. Maybe better to simply acknowledge and move one.

Side note:  Good luck arguing that with the local tax man who may completely ignore your arguments about what income is taxable or not at any point in time. You have no idea how much time I and my wife have had to "debate" with the local tax man on many issues. A huge time and expense. You by your own admission have no company in Hungary, so are arguing from pure theory not experience, and here experience trumps theory...... I can dismiss your arguments on that alone. You do not know what your are talking about in a reality based level. Ergo, quoting "international accounting standards" will not change local reality and expense to a local business debating tax law. It is sometimes easier, and most importantly, cheaper, for a business to simply work as if, to the tax man, that water runs uphill. You as the outlier client, thus, may not matter. Tough. Complain to your elected officials to change the tax law then.

klsallee :
fluffy2560 :

If you have advance payment, then it cannot be income.

Sigh..... I give up. You continue to miss the point. Which is about local reality, not your personal egocentric needs how you think things should work here under your own terms and ideals. I rarely repeat myself, but I will here, because the world may need to see again how you completely miss the point:

And companies are not stupid. They have done their research on who can pay what and when, and adjust their accounting system to serve the most "common" customer type at the lowest cost. So you, coming with a bit of a high income earner expat bubble, disrupts that system. It is simply cheaper for them to reject your payment than to process it. Just some things to think about.

Or to put in terms you may understand, from prior posts..... despite all logic, here water may be declared to run uphill. One must deal with that local perspective and adjust accordingly. One can point out the absurdity, but endlessly complaining about absurdities is a waste of everyone's time. Maybe better to simply acknowledge and move one.

Side note:  Good luck arguing that with the local tax man who may completely ignore your arguments about what income is taxable or not at any point in time. You have no idea how much time I and my wife have had to "debate" with the local tax man on many issues. A huge time and expense. You by your own admission have no company in Hungary, so are arguing from pure theory not experience, and here experience trumps theory...... I can dismiss your arguments on that alone. You do not know what your are talking about in a reality based level. Ergo, quoting "international accounting standards" will not change local reality and expense to a local business debating tax law. It is sometimes easier, and most importantly, cheaper, for a business to simply work as if, to the tax man, that water runs uphill. You as the outlier client, thus, may not matter. Tough. Complain to your elected officials to change the tax law then.

Actually I didn't miss the point at all.   I just ignored the non-core ranty bits.

I was complaining I couldn't pay my gas bill or whatever in advance and discussing why the gas/whatever company wouldn't want my money effectively for free and how that would be usefully handled and to their advantage in their accounts.   I know from experience (really, I do) that many companies (and unsurprisingly governments) do not manage their cash holdings and flows effectively.   

I was never talking about the microcosm of your or my personal tax situation. I can see you are frustrated by them.  Not surprising, most of them are drones and lower level ones at that but they are directed by bigger jerks in government who are the real ones in need your ire, not me.   

As for water flowing uphill, that's the space time dilation physics of house builders here.  In other places, it's parallel universe especially for government finance where all sorts of variations on fundamental constants, selective laws of nature, hocus-pocus, astrology, witchcraft, juju and weirdness abound.   

OK, I'm exaggerating a bit.

But not about astrology.

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