Long term contract in Hungary or work as a permanent employee?

[Waxhill]

Hi

I've been offered a permanent job in Hungary, but they are suggesting that working there as a UK Ltd is a more tax efficient way to do it.

Although corporation tax in Hungary is low (9%) the VAT rate is 27%, so typically a Hungarian Ltd would lose approx 53% of their income and I would have to be VAT registered, whereas the UK VAT threshold is higher and I wouldn't need to be registered.

As an individual, I would be classed as permanently resident there (this is a long term thing), so would have to pay local taxes on any income taken from the company.

Is this worthwhile exploring or is it just going to be a nightmare?

Thanks!

[MrButton]

Hi

I've been offered a permanent job in Hungary, but they are suggesting that working there as a UK Ltd is a more tax efficient way to do it.

Although corporation tax in Hungary is low (9%) the VAT rate is 27%, so typically a Hungarian Ltd would lose approx 53% of their income and I would have to be VAT registered, whereas the UK VAT threshold is higher and I wouldn't need to be registered.

As an individual, I would be classed as permanently resident there (this is a long term thing), so would have to pay local taxes on any income taken from the company.

Is this worthwhile exploring or is it just going to be a nightmare?

Thanks!

As you're going to be a resident there and your work will be done in Hungary - then I wouldn't bother.

Have a search on the forum - similar questions have been asked a few times.

[BlasterBates]

If you do work through your UK Ltd in Hungary you need to register it there and you will almost certainly be taxed in the same way as any other Hungarian company.

In the EU you can operate your Ltd company anywhere but you must register with the local authorities. The way it works is you open a branch in every country you work, register that branch and comply with the local tax rules, keeping a separate set of accounts for every country you do business in. If you only work in Hungary and not in the UK then there is no tax to pay in the UK, it will be paid in Hungary.

If you do choose to work in Hungary you need to visit a local accountant, best to use a completely different company whether Hungarian or UK Ltd to differentiate your income between Hungary and the UK.

[sal]

Although corporation tax in Hungary is low (9%) the VAT rate is 27%, so typically a Hungarian Ltd would lose approx 53% of their income

VAT has nothing to do with your take home pay as you simply collect it from your clients on behalf of the taxman and then pay it up. As far as your take home is concerned it's irrelevant if it's 20% or 27%.

How did you come up with the statement that Hungarian ltd. loses 53% of their income? where are these money go to? Does it mean in Hungary 1-man bands are automatically "IR35" (equivalent) caught and you pay personal tax plus NI (equivalent), in which case the fact whether the ltd. is UK registered, or not is most likely irrelevant.