Experience with running a company in Hungary?

[Marzio]

Yes, if you render B2B services they‌ have the highest VAT in EU.

 

[Onassis]

VAT shouldn't apply to B2B services though, unless the customer is not‍ VAT registered / does not have a valid VAT ID.

 

[gnud]

Yes: Hungary - Individual - Income determination

 

[Marzio]

Thanks for correcting‍ me 🙂

"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.

 

[gnud]

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 business︀ is liable to pay VAT in its home country. Or do I get it wrong?︁

 

[Onassis]

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]

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]

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]

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 the︀ major issues that are making me leave Hungary for Dubai.