Experience with running a company in Hungary?

[Onassis]

Marzio said:
Yes, if you render B2B services they have the highest VAT in EU.
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VAT shouldn't apply to B2B services though, unless the customer is not VAT registered / does not have a valid VAT ID.

 

[gnud]

newguyhere said:
Do social charges apply to dividends paid out to a person?
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Yes: Hungary - Individual - Income determination

 

[Marzio]

Onassis said:
VAT shouldn't apply to B2B services though, unless the customer is not VAT registered / does not have a valid VAT ID.
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Thanks for correcting me 🙂

gnud said:
Yes: Hungary - Individual - Income determination
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"Dividend income is taxable at 15% PIT, and no tax base addition has to be applied. An additional 13% social tax is payable on dividend income if certain conditions are not met, but only up to a relatively low cap."

I wonder which conditions has to be met to avoid paying 13% social tax.

Anyhow Hungary is probably best used as a intermediary holding location.

Last edited: May 13, 2023

 

[gnud]

Onassis said:
VAT shouldn't apply to B2B services though, unless the customer is not VAT registered / does not have a valid VAT ID.
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Hm, really? I thought you need to charge VAT at all times when you're VAT registered and you'll use it to reclaim the VAT you were charged by other businesses and simply pay the difference to the tax office. Only in case of the US sales tax no tax is charged for purchases between businesses and it's all shifted to the consumer. For example the reverse charge mechanism in crossborder intra-EU B2B transactions directly says the purchasing business is liable to pay VAT in its home country. Or do I get it wrong?

 

[Onassis]

gnud said:
Hm, really? I thought you need to charge VAT at all times when you're VAT registered and you'll use it to reclaim the VAT you were charged by other businesses and simply pay the difference to the tax office.
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When dealing with local (in this case Hungarian) companies, yes, but not when dealing with companies registered in other EU member states (as long as they are VAT registered and have valid VAT IDs)

 

[gnud]

Onassis said:
When dealing with local (in this case Hungarian) companies, yes, but not when dealing with companies registered in other EU member states (as long as they are VAT registered and have valid VAT IDs)
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Why does the reverse charge mechanism exists then? As a supplier you don't charge VAT but the purchaser has to then pay a VAT a home, so some VAT is charged during the transaction, even if it's cross-border. There simply is no VAT-free B2B transaction. Or do I get it wrong?

 

[Onassis]

gnud said:
Why does the reverse charge mechanism exists then? As a supplier you don't charge VAT but the purchaser has to then pay a VAT a home, so some VAT is charged during the transaction, even if it's cross-border. There simply is no VAT-free B2B transaction. Or do I get it wrong?
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My point is that the 27% VAT rate doesn't matter if all you're doing is providing services or products to other EU VAT registered businesses. At least from the perspective of the Hungarian company (the supplier).

 

[gnud]

Onassis said:
My point is that the 27% VAT rate doesn't matter if all you're doing is providing services or products to other EU VAT registered businesses. At least from the perspective of the Hungarian company (the supplier).
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Ah yeah, sure, but the moment you purchase you're hit with the 27%, regardless of if it's domestic or abroad, that on top of that you won't be able to recover VAT since you export and thus don't charge VAT. So you end up paying the full VAT on your purchases.

Glad I understood it right. Or not really, because that's one of the major issues that are making me leave Hungary for Dubai.

Last edited: May 13, 2023