UK company run from Hungary

15 replies
Hi Guys,

I'm running a UK company as a director and I'm living in the UK. I'm planning to move to Hungary and run the UK company as usual. I have no employees, offices, all done on a laptop. And I rarelly need to do anything (4 hour work week helped).

Now my UK accountant says I need to pay UK corporation taxes and paying dividend taxes after my dividends. But she doesn't know about the laws in HU.

I talked to accountants and advisors in Hungary and some says that if I manage the company from HU then I need to create a HU subsidary. Which would be insane as the law are VERY high in HU and would sufficate my business.

Others said that since I don't have employees, offices or physical products I can just pay UK corp taxes and UK dividend taxes.

I tried to contact Tim Ferris about this but it's impossible to reach him. So I don't know who else to ask.

I contacted some high profile HU tax advisors. One of them would charge me 450EUR for the advice but already told me in summary that if I run and manage the UK co from HU then I need to have a subsidary.

Could this really be true? Any experience living in another country then your company?
#company #hungary #run
  • Profile picture of the author NadineL
    Ever thought of just taking your concern offshore? Form an umbrella company offshore and run the UK one from there. Or re-incorporate offshore completely. Get a mail forwarding address in the UK that receives your mail on your behalf and forwards it to your address in Hungary.

    Do a bit of research on this. I think a good place to start would be EscapeArtist | Live, Work, Play, Retire & Invest Abroad

    N
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    • Profile picture of the author ThisIsMeNow
      Originally Posted by NadineL View Post

      Ever thought of just taking your concern offshore? Form an umbrella company offshore and run the UK one from there. Or re-incorporate offshore completely. Get a mail forwarding address in the UK that receives your mail on your behalf and forwards it to your address in Hungary.

      Do a bit of research on this. I think a good place to start would be EscapeArtist | Live, Work, Play, Retire & Invest Abroad

      N
      I was thinking of taking the whole play offshore but what I was told is that if the mangement of the company would be in Hungary, Hungary would require me to pay corporation tax.
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      • Profile picture of the author Ardral
        Originally Posted by ThisIsMeNow View Post

        I was thinking of taking the whole play offshore but what I was told is that if the mangement of the company would be in Hungary, Hungary would require me to pay corporation tax.
        Sorry for the slight tangent here but what is the Corp tax % in Hungary?
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        • Profile picture of the author ThisIsMeNow
          Originally Posted by Ardral View Post

          Sorry for the slight tangent here but what is the Corp tax % in Hungary?
          19% but this is not all. When running a Hungarian company you'll need to pay special social contributions and other taxes. I know from my accountant friends that all together it comes to a whopping 50-60% tax (incl CT.).
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          • Profile picture of the author Jopaar
            Originally Posted by ThisIsMeNow View Post

            19% but this is not all. When running a Hungarian company you'll need to pay special social contributions and other taxes. I know from my accountant friends that all together it comes to a whopping 50-60% tax (incl CT.).
            I don't know where your infos come from but the corporation tax is 16%.
            But as you said there are some social contribution and taxes.
            The latest news is:
            you need to pay totally : 16% corporation tax + 47,5% (27% social 10% pension contribution,7% healthy contr. ,1,5% educational )special social contributions and other taxes.
            Even if you don't have income than you have to pay 47,5%.
            So think about it, i don't know the tax rates in UK is more or less?
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            • Profile picture of the author ThisIsMeNow
              Originally Posted by Jopaar View Post

              I don't know where your infos come from but the corporation tax is 16%.
              But as you said there are some social contribution and taxes.
              The latest news is:
              you need to pay totally : 16% corporation tax + 47,5% (27% social 10% pension contribution,7% healthy contr. ,1,5% educational )special social contributions and other taxes.
              Even if you don't have income than you have to pay 47,5%.
              So think about it, i don't know the tax rates in UK is more or less?
              Yes, that's the problem. I know from an accountant friend that it comes out at about 50-60%. UK is max 20%, usually less.
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  • Profile picture of the author NadineL
    So then incorporate offshore, company would then be offshore. Corporate tax would only be applicable if your address was stated as physical in Hungary. Besides, if you're doing all from your laptop, you're considered one of the slipper brigade. No physical product touches Hungary, not a brick and mortar business. If you want to get technical, run it through a proxy and then what, how they going to pin point your IP to Hungary? Depends if it's important to have a presence in Hungary, that then depends on your residency status. This can get very technical. EU passport, guess no biggie. UK passport the same.

    Drop a mail to escapeartist admin for better direction. I ran a UK company from SA a few years back. Sure there were tax, but so were there write offs

    N
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    • Profile picture of the author ThisIsMeNow
      Originally Posted by NadineL View Post

      So then incorporate offshore, company would then be offshore. Corporate tax would only be applicable if your address was stated as physical in Hungary. Besides, if you're doing all from your laptop, you're considered one of the slipper brigade. No physical product touches Hungary, not a brick and mortar business. If you want to get technical, run it through a proxy and then what, how they going to pin point your IP to Hungary? Depends if it's important to have a presence in Hungary, that then depends on your residency status. This can get very technical. EU passport, guess no biggie. UK passport the same.

      Drop a mail to escapeartist admin for better direction. I ran a UK company from SA a few years back. Sure there were tax, but so were there write offs

      N
      I would like to do this, but unfortunately Hungaian laws are very restrictive with people who run offshore companies in Hungary. It states that if someone has more than a 10% share in an offshore company you would need to pay penalty tax on your dividends. Plus the company your are having a share in may need to have a subsidiary in Hungary - after which you'd need to pay coporation taxes.

      According to Hungarian laws the physical address of the company does not really matter. What matters is if you as the employee of the company work in Hungary. For instance, the place of management of a company makes a company Hungarian by law and you're required to create a subsidiary and pay corporation taxes. This applies to UK companies too, and it's all written in the double taxation treaty document which can be found online.

      I briefly emailed with escapeartist and they said they can't advise specifically in my sitation. They can only speak in general terms.
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  • Profile picture of the author goneill
    Slightly confused here?

    When you originally registered the company you had to declare the address of the registered office and also put up a name plate of the company further you you also had to give your directors address in the UK.

    Now if you leave the UK, You are no longer domiciled in the UK but are managing a UK Company, which changes your Personal Tax status (Income tax and tax on dividends) as you would in theory be non domiciled director of a UK company which means you would have to change your directors address and domicile, which is required by Companies House UK.

    As others posts have suggested it may pay you to go offshore route and could use a proxy director and register the holding company in a tax haven. You would have to weigh up the legal costs v income
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    • Profile picture of the author ThisIsMeNow
      Originally Posted by goneill View Post

      Slightly confused here?

      When you originally registered the company you had to declare the address of the registered office and also put up a name plate of the company further you you also had to give your directors address in the UK.

      Now if you leave the UK, You are no longer domiciled in the UK but are managing a UK Company, which changes your Personal Tax status (Income tax and tax on dividends) as you would in theory be non domiciled director of a UK company which means you would have to change your directors address and domicile, which is required by Companies House UK.

      As others posts have suggested it may pay you to go offshore route and could use a proxy director and register the holding company in a tax haven. You would have to weigh up the legal costs v income
      Proxy is not the problem. Hungarian laws are. Even if I'm not the director of the offshore company but I "manage" the company, I would need to create a Hungarian subsidiary. Plus, if I have more than 10% share and get dividends I'd need to pay penalty tax.
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  • Profile picture of the author Sid Hale
    errrrrrrr.......

    Maybe reconsider making the move?

    or, if you really want to get out of the UK - maybe relocate both yourself and the company to one of the British territories in the Carribean.
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    • Profile picture of the author Importexport
      How will anyone know that you are managing the company from Hungary? If you have a UK address now, make sure that before you move to Hungary you set up any UK bank accounts that you will need. With the low cost of air fares between the UK and Hungary you could go there every now and then to maintain contact with your bank etc.

      A forwarding address is all you will need to maintain the appearance of continuing to be in residence in the UK. With no passport controls to worry about, how would anyone know where you are within the EU? Provided you pay your taxes in the UK, I can't see any problem arising.

      P.S. For 22 years I operated an importing business through franchisees in 4 countries, and at various times I lived in each of those countries, so I know a bit about managing businesses from another country.
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      • Profile picture of the author ThisIsMeNow
        Originally Posted by Importexport View Post

        How will anyone know that you are managing the company from Hungary? If you have a UK address now, make sure that before you move to Hungary you set up any UK bank accounts that you will need. With the low cost of air fares between the UK and Hungary you could go there every now and then to maintain contact with your bank etc.

        A forwarding address is all you will need to maintain the appearance of continuing to be in residence in the UK. With no passport controls to worry about, how would anyone know where you are within the EU? Provided you pay your taxes in the UK, I can't see any problem arising.

        P.S. For 22 years I operated an importing business through franchisees in 4 countries, and at various times I lived in each of those countries, so I know a bit about managing businesses from another country.
        They can track me down very easily. I have a house there and will be living there permanently. And if so I would also need to pay taxes - so another way to track.
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    • Profile picture of the author ThisIsMeNow
      Originally Posted by Sid Hale View Post

      errrrrrrr.......

      Maybe reconsider making the move?

      or, if you really want to get out of the UK - maybe relocate both yourself and the company to one of the British territories in the Carribean.
      Problematic... I bought a house and really want to move there because the drummer of my band lives there.
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  • Profile picture of the author beyond11
    I am an experienced SEO manager in Hungary, so contact me if you need this type of services.
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