taxes in Hugnary

Apologies you seem to be with means to pay for advice and support, I myself created a company in Hungary and got great support from my accounting company (also for private taxes).
Asking around on forums is fine and good, but you really should ask with an accounting company, I pay less then EUR 100 pm (including VAT), they do many things, apply for health insurance to even water well and other smaller items.

What I should really do is ask the Hungarian Tax Department...then I will know for sure and not have to pay someone just to know if I will be taxed.

furnitureman wrote:

What I should really do is ask the Hungarian Tax Department...then I will know for sure and not have to pay someone just to know if I will be taxed.

I think this was covered elsewhere in these forums.

I believe pension income is not taxed in Hungary but as you are a US person, you still have to contend with the IRS.  It won't make much difference to you as income tax credits here can be offset there under the DTA (Double Taxation Agreement).

I'm not a US person nor in receipt of a pension so it doesn't really come on my radar.

Tax Admin office click here.

If this subject was covered elsewhere, please tell me how to retrieve it.
I have have been receiving Social Security benefits here for 10 years. There is no tax levied by USA on Social Security income UNLESS you are also working and generating income on top of the SS. When I asked a USA-based international tax consultant, they informed me that "Hungary taxes all immigrant residents at 15% on their worldwide income"....but the international TT between USA and Hungary outlaws double taxation.
Later I find there is a distinction made between private pensions and public (government) pensions...like USA Social Security. If you write to tax authorities with this question, they will be happy to set up a 30 minute video call at $150-$250 paid in advance just to give you the answer. Hungarian Tax office website is not translatable by Google Translate....strange but true.
Thus, my incentive to seek USA expats already living/retired in Hungary and receiving USA SS and ask if they are paying tax to Hungary for receiving a USA government pension known as Social Security.

Tax departments will give you the rules, not the loopholes or exceptions, I had a few examples myself. The money I spent was very much worthwhile (apart from the services they render in dealing with bureaucracy).

One small example which I am sure they will not tell you straight out.
There is a minimum health care contribution of lets say EUR 30 pm, however if you are an employee on a part time contract you pay far less but you are still covered.
Other example (in any case a number of years ago) if you pay a dividend from your company there is a cap on health care contribution annually of for argument sake EUR 1.000, paying a dividend annually is therefore financially not wise.
Of course they could tell you that VAT reclaim is for 5 years, but that corporate losses can only be offset by profits. If you feel that you can get this type of info (even if official) without asking or research I think you are wrong.
Also please be careful on WHEN to move where are you taxed during the year of move and what is more beneficial, also ask yourself questions (in case of eg a bonus) how this is classified and when should it be paid, (Can you defer, can you reclassify bonus, retention payment, pension, ...)

Apart from that I do not have to deal with the hassle of income tax declarations, health insurance cards, etc. I do not know if you are a pensioner or not (I am not), you have to deal with things some way or another, having this headache outsourced helps.

Anyhow good luck, tax can create savings or create additional cost

Retirement is mentioned, but this does not mean you are 65 already, I went into Semi-retirement at the age of 52, in Hungary you are therefore not retired yet even if you would like to be, also beyond the age of 65 things can be done. (or for that matter avoided)

My dad left school and went to work in a bank, he is pretty clued up on money matters, but even he has an accountant to deal with his pension and taxes etc..... This is just in one country the UK, so dealing with a couple of countries would be even more mind-boggling. All I can suggest is that you get in contact with an accountant.

After relocating to Budapest from USA and establishing temporary residency, my wife and I will be 100% retired and not working in Hungary or anywhere else. We had previously planned to do this in Portugal but Portugal legislature needed $$$ and last year changed its immigrant visa program known as NHR which exempted USA immigrants from any income tax for 10 years. When I asked a Portuguese tax consultant about the abrupt change, she said "Sir, 10% of your SS income is well worth paying for other things you will receive in retirement in our wonderful country." I replied like what? the summer wild fires? and a bueracracy worse than France?
why do others seem to think we should be HAPPY to pay tax to the government?

Indeed, I concur fully

I concur with SIM i meant to say

furnitureman wrote:

After relocating to Budapest from USA and establishing temporary residency, my wife and I will be 100% retired and not working in Hungary or anywhere else. We had previously planned to do this in Portugal but Portugal legislature needed $$$ and last year changed its immigrant visa program known as NHR which exempted USA immigrants from any income tax for 10 years. When I asked a Portuguese tax consultant about the abrupt change, she said "Sir, 10% of your SS income is well worth paying for other things you will receive in retirement in our wonderful country." I replied like what? the summer wild fires? and a bureaucracy worse than France?
why do others seem to think we should be HAPPY to pay tax to the government?

In theory paying tax gets you benefits of public services which here includes sufficient health care at no further cost or not much cost.   Everywhere in Europe has socialised medicine systems.  US is the anomaly out of all developed countries. 

Maybe you should check out the digital nomad visas which are becoming popular - Croatia for example. 

I think others are possible like Costa Rica and Georgia (not the US state).  Costa Rica is popular for US retirees.  Healthcare is considered very good there.  Here, probably not so much. Friend of mine retired to Malaysia.  He was retired in The Philippines but jumped ship because it was suddenly much better there on his budget.

Oh, and you'll never get away from FATCA. 

BTW, my brother had a brain haemorrhage in Lisbon, Portugal and they couldn't do anything for him.  They said that they had no capability for his complex case.  He was airlifted to the UK and was treated there.  Not that it did him any good in the long run.   

Regarding tax offices, they will never tell you how to lower your tax bill.  They never have done that.

Apologies, to Furnitureman, 10% sounds very acceptable to me, even if in Hungary it might be less or even negative (depending on the situation). Be happy that you can pay taxes. Look at quality of life please as an overall picture Property market in Portugal is far more expensive than it is in Hungary at this stage. If Cheap comfortable living is your thing, please have a look at Georgia (country).

Taxes are just one aspect of life, yes you have to be aware, but honestly I know about the Portugese rule and 10% is fine, just Portugal (for me is not)

All I want to know from any tax authority is "Will you tax my USA earned Social Security benefits?" Its a yes or no question. I never expected any advice from the tax authority on how to lower my tax obligations... .also, what is "FATCA"?

Sorry if you have enough money to be concerned about taxes but do not know about FATCA, please have a look at Wikipedia or all the other of thousands of docs, I do NOT understand, FATCA is relevant in Portugal, Hungary and most other countries alike, please inform yourselves. The least you can do is some research yourselves.

By the way rules, change over time, perhaps not taxed now but in a few years it might very well be, by the way it is not only income tax in all countries, eg Georgia is considered low tax, but depending on "income" you could pay up to 80 bps annually on your property.
BE CAREFUL in just looking at what is called income tax. In Portugal property taxes can also be excessive.
Prepare yourselves carefully. Also be aware of the country you want to move to , you have to feel at home.

Conceptually I agree with Fluffy on DTA s but there are some negative exceptions and retrieval of tax withheld might be very very painful, even within the EU and depending on the amount involved might not even be successful.

cdw057 wrote:

Conceptually I agree with Fluffy on DTA s but there are some negative exceptions and retrieval of tax withheld might be very very painful, even within the EU and depending on the amount involved might not even be successful.

Totally agree.

DTA might seem to be all there is but the only way is to get professional help on taxes.

FATCAis a serious nonsense for US persons living in another country.   

It could mean someone cannot even open a bank account locally to pay your bills.  Many banks would rather refuse service to a US person that incur the cost of complying with FATCA.

It's universally hated by any American expat I've met.

Again apologies, I am a bit upset on the ignorance on taxes, I prefer to pay income taxes and no excessive property/council taxes, hidden capital gain, water usage, car taxes (eg in the Netherlands you pay 40% extra just for polluting potentially), dog taxes, even cats.
It does not really matter where you pay it from, just some taxes as mentioned by Fluffy you can offset or even forego. I have to say in this Hungary is an excellent country (VERY low (apart from VAT) additional taxes). Just looking at income tax is naive I think.

In the Netherlands even if you would pay no income tax at all, bottom line you still pay a massive amount on all types of services.

Depending on where you live the tax on one dog can go up to EUR 200 py , if you have more dogs it can even be EUR 500 py per dog (AND YOU HAVE TO CLEAN UP THE SHIT YOURSELVES (the latter is fair)

Having said that if you have low income this can be waived.

Just a small anecdote but also to prove my point before.

Interesting chain also for me to get rid of my frustration on the topic, furnitureman seems to have disappeared, looking forward to his response and views. Europe has many countries and many (hidden) rules and so do countries outside the EU.
From a tax perspective my view is that Hungary is straightforward and bottom line actually not too bad.

I should get paid for my insights (loads of stories to tell on UK, Luxembourg, Germany and Netherlands), but that aside

The aim of the forum is to give advice, I think we have done our job. We can do no more if those that do take it?

I see furnitureman is posting in a few forums? Is he after a quick tax break I wonder? 

Possibly, but as from this chain, he, but for that matter many others should really conclude life is not simple, moving for (income) tax breaks only is not wise, loads of other taxes to deal with. Apart from that tax is just one small aspect of life. If you have enough money tax is not too important (and you can also pay for an accountant), if you do not have, moving country is very expensive.
I count at least EUR 30 K to do so.  (all in lawyers, property tax, notary, moving stuff, new furniture, cancelling contracts, ....)
If one can pay EUR 30 K, paying an accountant should not be a real issue.


Yes taxes are important but to limit tax to income tax income is not good.
I repeat myself from a tax perspective Hungary is fine (other items can be discussed and valued seperately).

The Portugal example was quite illustrative (council and property taxes completely ignored, even if zero % income tax, still tax bill would be quite high).
DTA's of course are important, but other items even more (often hidden).

Taxes can be saved and all need support (including me), you have to pay for services in this life although I have to say, many good advice in general (not meaning tax) on this forum for free

One last remark on Portugal, the reason the 10% has been imposed is that as I understand the Swedish tax authorities started to consider Portugal as a tax haven for expats, Swedish tax evadors have to pay and 10% is just a compromise.
In Hungary the situation is different none of the pensioners pay so there is no discrimination between expats and real Hungarians.
The 10% on a European level is still very low, but of course for (EU) pensioners in Hungary zero is of course a bit lower,
Consultant in Portugal my xxx , she should have given a bit more clarity

What's being referred to is the tax burden.  In most countries in the EU, it's about 50% all in. It doesn't matter which country you go to.  Some taxes are lower and some are higher in different countries, but it always ends up at about 50% overall. 

I think the system here has some bad aspects - the VAT is the worst at 27% which is of course across consumption. There's no way around it and it's unavoidable.  It will of course hit the higher paid who are more likely to buy consumer goods. You can see the logic but living with it is quite painful. 

With expensive things, pre-COVID and before the VAT consumption changes to the buyer's location, I was always ordering stuff abroad for delivery here.  It's one of the reasons Amazon was based in Luxembourg.   We've even driven to Vienna to buy stuff.  That 7 or 8% difference can make a significant cost difference.  One also can have a nice lunch on the way back too.

Thank you everyone....you have succeeded in telling me everything I never asked about ..or wanted
to know...while believing you somehow know my motives for asking in the first place and then following up with the audacity to tell me how I should feel about taxation.

furnitureman wrote:

Thank you everyone....you have succeeded in telling me everything I never asked about ..or wanted
to know...while believing you somehow know my motives for asking in the first place and then following up with the audacity to tell me how I should feel about taxation.

You're welcome Michael.

It's not that we want to tell you how to feel (are you a bit grumpy?).  You asked questions like "why should I want to pay tax to the government" and you got some answers which we spent our valuable time writing.

Most people will grudgingly accept tax as a necessity for being in a "civilised" society.   The system over here works differently to the USA, particularly the concept of universal healthcare.   

There are no special privileges for being an American here and however much you want it to be like the USA, it won't be like that for the foreseeable future.

If you aren't happy with these answers, then don't go cheap and expect definitive information here - hire a tax specialist.

furnitureman wrote:

Thank you everyone....you have succeeded in telling me everything I never asked about ..or wanted
to know...while believing you somehow know my motives for asking in the first place and then following up with the audacity to tell me how I should feel about taxation.

You will be told the same in pretty much the same EU countries.

What should be understood and is understood by most posters is that these threads are not one on one communications. Mentioned by Fluffy we try to give some substance on this forum (for all to read).
Not having done any research, complaining about a "consultant" in Portugal (who apparently did not inform you about other taxes) is not good.
Why Hungary, does Budapest look nice on pictures? Portugese wild-fires mentioned as an argument not to go.

I enjoyed in a way to be able to add some substance to the tax-topic, if it is not important for the initial poster that is fine, I hope future readers can benefit a bit.

Dutch (like me) are supposed to be cheap, what I do not understand is that US citizens on one side can afford to move and on the other side can not spend EUR 1000 on advice. (I wonder on the price of the Portugese "consultant").

Hungary in terms of bureaucracy is not too bad.
What I wonder is how can people move continents without doing some research (or ideally having visited the place?)

I know quite some people from the US and they do appreciate/recognize that Europe is different. Again why Europe if the US has so many pluses? Be prepared for some very negative set-backs in any of the EU countries.
RESEARCH, internet is here and forums should not be the only source of info.

cdw057 wrote:

I know quite some people from the US and they do appreciate/recognize that Europe is different. Again why Europe if the US has so many pluses? Be prepared for some very negative set-backs in any of the EU countries.
RESEARCH, internet is here and forums should not be the only source of info.

Interesting topic, maybe we can continue that here>  Absolutely Anything Else?

I have traveled the world in my 50 year career but now retired. I already know Europe is different. Been there, understand that. Why do you think i am planning to retire there?
My simple question is still out there waiting for a simple answer from anyone without giving me a lecture on how I should appreciate paying tax and how I should use this forum... if you don't have the desire to answer the question, please just refrain from writing your novel here.

"Will Hungary tax my USA based Social Security benefits after I relocate?"
If you dont know

then leave space or others who know the answer.

furnitureman wrote:

I have traveled the world in my 50 year career but now retired. I already know Europe is different. Been there, understand that. Why do you think i am planning to retire there?
My simple question is still out there waiting for a simple answer from anyone without giving me a lecture on how I should appreciate paying tax and how I should use this forum... if you don't have the desire to answer the question, please just refrain from writing your novel here.

"Will Hungary tax my USA based Social Security benefits after I relocate?"
If you dont know

hmmm....Michael, how did you make it that far without knowing how to engage with culturally different people?  There is an etiquette here.  You won't get help from people by being unpleasant.  A friendly approach works far better.  BTW, there aren't that many of us here persistently  so your pool of available resources is not very large. 

But good luck with your search.

Fluffy...let me point out I was "nice" until being attacked so please re direct your lectures elsewhere. Asking a simple unemotional question doesn't require a PhD in world culture. I have already been private messaged by a few who read my question and did exactly what I was waiting for...provided the unemotional answer to my question. It is rare that I engage anyone for any reason in chat room....with your various comments, the reason is confirmed...the chat room bullies who think they somehow have special position in the chat room, always what to pander their "expert advice" and will condemn ANYONE who does not conform to their standards. The mediator has not edited anything I have asked or response I have made. ...but now that I have finally received the answer I was asking for, i will not return.

furnitureman wrote:

Fluffy...let me point out I was "nice" until being attacked so please re direct your lectures elsewhere. Asking a simple unemotional question doesn't require a PhD in world culture. I have already been private messaged by a few who read my question and did exactly what I was waiting for...provided the unemotional answer to my question. It is rare that I engage anyone for any reason in chat room....with your various comments, the reason is confirmed...the chat room bullies who think they somehow have special position in the chat room, always what to pander their "expert advice" and will condemn ANYONE who does not conform to their standards. The mediator has not edited anything I have asked or response I have made. ...but now that I have finally received the answer I was asking for, i will not return.

Ok, good luck with all that then.

Just wondering, travelling around the world and you do not know anyone who can help you on the topic? Remarkable, you need a consultant to tell you about the 10% rule in Portugal (apart from the other rules)?
Yes I am negative, yes I am sceptical. in those 50 years and travelling around the world did you not find people and/or cultures you like? Also if you can travel around the world you are probably not without means.

I have travelled around the world as well, some countries I liked more then others, but as a matter of habit me and my wife went to Eastern Europe at least once per year (for 2 weeks), yes more holidays in the EU than the US. The other 2 weeks were spent in Asia or Africa and I have to say I do like Sri Lanka (but for holidays not to live there).
From the holidays (and business trips) some good contacts (and info).

Take a positive approach and why not ask the people you met over the years to travelled around the world and you must have your preference (and experience). I posed the question before, why Hungary (after dismissing Portugal).

To the initial poster
Good luck with retirement, but if you did not find good acquaintances or even friends in travelling the world I am sceptical. I was lucky in a way in moving to Hungary, I met very friendly people, they were not tax-specialists (I dealt with that myself (also by paying)), but having some people around you with who  you can socialize (swimming, chess, restaurants, drinking) really helps.

Also mentioned on the forum paying taxes in Europe is normal, this has to be accepted.

My posts over the last 2 days might not seem very coherent and you might even say the writer (me) is drunk (yes I like my glass (or even more) of wine. But I can get (too much) involved in certain topics (tax (or the ignorance thereof) being one of them).

My apologies to readers that I have been so direct, posts in other threads are more neutral.
As a side , I think this thread was also not only about tax.

Unless there is an interesting remark I consider the topic closed, however if there is a new tax thread I am happy to contribute (if the attitude is positive and not of ignorant nature)

I really do worry for mankind if you cant accept the suggestions given. With that I shall not bother any more of my time, nor should anyone else.

cdw057 wrote:

....
Also mentioned on the forum paying taxes in Europe is normal, this has to be accepted.

My posts over the last 2 days might not seem very coherent and you might even say the writer (me) is drunk (yes I like my glass (or even more) of wine. But I can get (too much) involved in certain topics (tax (or the ignorance thereof) being one of them).

Sometimes might be the best way to see the world.  In these times, I sympathise....and "Proost".

cdw057 wrote:

....
My apologies to readers that I have been so direct, posts in other threads are more neutral.
As a side , I think this thread was also not only about tax.

I agree, it's not only about tax.

People often come in these forums and ask about moving to Hungary.  The first thing people here ask is usually "Why?".   

It's really difficult to live here for some people - right wing fascist government,  anti-foreigner, anti-liberal , extremist groups, aggressive immigration policies,  anti-LGBT, corruption, environmental concerns and a raft of other things.  It's a more volatile place than many other countries.  It wasn't like that when I arrived.  But it is now. It makes me a bit uncomfortable because we cannot see an end to it and we loathe O1G and his cronies..   

Sometimes people have rational reasons for moving here and other times I (at least) get the impression that wannabe residents are running away from something or someone or are trying to stretch a pension.    Grass is always greener somewhere else.

Imagine coming here as a retiree with one's other half,  living in the expat bubble, then the other half dying and being stuck here after 5,10, 20, 30 years not speaking the language and with no-one locally to rely on.  In the meantime things have changed back home - housing market changed and now, the remaining person cannot afford to go back or there's no-one left.   

I think it's a fair and perfectly reasonable question to ask why someone wants to come here even in a round about way.   Some people just do not think things through.