Want to minimise my tax liabilities

[gap]

I got a remote job in the US, as a Hungarian citizen what are my tax minimisation options? Probably the best option would be to change residence, but is it worth the effort and initial costs for about 72,000 USD per year from that US company + ~48,000 USD / year from another individual (payed in crypto)?
- What are my options for opening a business + bank account?
- Transfering funds to personal bank account to pay the bills etc?

Spoiler: Current indiv. taxation in Hungary:
- Right now I'm in 'KATA (“Small Taxpayers' Tax”)' form of taxation, It is a fixed amount of tax in every month (~130 USD/m) that is independent of the actual income
- If I receive more than 3M HUF (~7,900 USD) in income from a foreign partner in a given year, I will have to pay 40% tax on 71.42% of the income.

Spoiler: Current LLC taxation in Hungary
Current LLC taxation in Hungary
- Corporate tax = 9% / yr
- Local business tax = 0 - 2% / yr (0.5% in my city)
- Chamber of Commerce registration fee = ~13 USD / yr
- Dividend tax = 15%

I want to set up an LLC in a country where I might be more tax efficient 🙂 Please tell me some of your experience, it's not a lot of money, but that's why it matters to me to choose the best possible solution.

 

[Larin]

Finally someone asking a sensible question, rather than, how do I pay 0%, which everyone else seems to want to know.
If you remain in Hungary, you and your company, regardless of where you register it, will be Hungarian tax residents. Therefore, it does not matter where your company is registered. In your situation, you will want to hire a good Hungarian accountant who will use his or her knowledge of the Hungarian tax code to advise you. Some of the more common strategies to reduce corporate tax burden is to run various expenses through the company, reinvest profits, etc.
Moving countries is a major life decision, but should you wish to do that, there are probably a few countries that would have lower tax rates, Cyprus, Bulgaria, Portugal come to mind.

 

[lostguy]

If you are doing such money it may be worth it for you. Depending on what it is you leave and what it is you will meet.

 

[Martin Everson]

gap said:
I got a remote job in the US, as a Hungarian citizen what are my tax minimisation options? Probably the best option would be to change residence, but is it worth the effort and initial costs for about 72,000 USD per year from that US company + ~48,000 USD / year from another individual (payed in crypto)?
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Ok so is this a partnership your entering? I am trying to understand how the tax could be so high in Hungary in this situation eek¤%&.

In any case @Larin gave good advice.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[pesto]

I don't understand it, Hungary has a acceptable tax rate, why would you relocate?

 

[Martin Everson]

It does indeed have a fair tax rate so I am trying to understand how that high rate he mentioned came about and if it is a special situation related to partnerships or something.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Marzio]

The best option is Hungarian LLC that pays 9% CIT and 15% PIT. Other than that don't you have to pay social security?

 

[fortunespeculator]

Larin said:
Finally someone asking a sensible question, rather than, how do I pay 0%, which everyone else seems to want to know.
If you remain in Hungary, you and your company, regardless of where you register it, will be Hungarian tax residents. Therefore, it does not matter where your company is registered. In your situation, you will want to hire a good Hungarian accountant who will use his or her knowledge of the Hungarian tax code to advise you. Some of the more common strategies to reduce corporate tax burden is to run various expenses through the company, reinvest profits, etc.
Moving countries is a major life decision, but should you wish to do that, there are probably a few countries that would have lower tax rates, Cyprus, Bulgaria, Portugal come to mind.
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or if you are open then via somebody's seychelles ibc -pay him a few percent(4-5%) and get your money in a non crs bank account.

 

[CyprusLawyer101]

Moving countries to avoid taxes is indeed rather radical decision and the total tax relief you get should be the basis upon which to weifh auch a decision. Howerver , if tou move to Cyprus and can demonstrate a foreign employer and provided you fly out of Cyprus for at least 90 days to perform your employment duties then your income would be fully exempted from tax.

 

[Larin]

fortunespeculator said:
or if you are open then via somebody's seychelles ibc -pay him a few percent(4-5%) and get your money in a non crs bank account.
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I assume that is until your bank account does fall under CRS and this happens: I did it all wrong...what can I do now? 🙁

 

[fortunespeculator]

Larin said:
I assume that is until your bank account does fall under CRS and this happens: I did it all wrong...what can I do now? 🙁
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I didnt understand what you tried to convey

 

[JimBeam]

My advice would be to open up a company and find a VERY GOOD accountant that knows how to place as much personal spending as possible on the company's account (things like phone bill, petrol, car usage or car lease, restaurant bills). Somewhere is even possible to rent a flat for an office and actually live in it just have one room setup as a company office. Pay out your self minimal salary (€500/month + contributions of probably another €600) and you can take the rest as dividends (at 15%). You'll sleep well and live nicely with this kind of money in Hungary.

Both CIT and dividend taxes in Hungary are among the lowest in Europe so you won't find it much cheaper than that.

 

[lostguy]

JimBeam said:
My advice would be to open up a company and find a VERY GOOD accountant that knows how to place as much personal spending as possible on the company's account
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That's actually a very good suggestion, it's the way to legally reduce taxes.

 

[JimBeam]

lostguy said:
That's actually a very good suggestion, it's the way to legally reduce taxes.
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A good accountant is not an expense.
He actually makes/saves your money so make sure you work with the one that knows his job really good!

 

[Marzio]

JimBeam said:
find a VERY GOOD accountant
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Do you know anybody in HU that would you suggest?

 

[JimBeam]

marzio said:
Do you know anybody in HU that would you suggest?
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I'm not from HU so can't suggest.

 

[gap]

Thank you all for your answers. It helped me accept that I'm not in such a bad position as a tax resident in Hungary.
I have been looking for the right accountant for many weeks. It's harder than I thought.

 

[aage]

JimBeam said:
A good accountant is not an expense.
He actually makes/saves your money so make sure you work with the one that knows his job really good!
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very important, yet it can be deducted as company expenses.