How much would you pay as a tax resident in Hungary?
Entrepreneurs that own Hungarian companies are subjected to certain taxes after the dividends they take based on whether or not they are a tax resident in Hungary. In this post, we will be looking at what a tax resident is and how it affects your income in Hungary.
Who is a tax resident in Hungary?
If you are a Hungarian citizen that has permanent residence in the country, you are presumably a tax resident in Hungary. You can also obtain a “tax residency certificate” from the Hungarian tax authority if you are not sure about your legal status. This certificate can also confirm whether or not you are a tax resident in any other country.
Understanding tax residency and your Hungarian company
When you want to take a dividend from your company in Hungary, you will need to reconsider your tax residency. You will be required to pay a variety of taxes as a business owner, but the most important taxes are income and social contribution taxes.
In Hungary, the income tax is 15%. If you are a tax resident in Hungary, you are required to pay income tax on your salary, which includes the taxes payable after you have taken the dividend from your Hungarian company. Double taxation treaties between your other company f resident must be checked in the event that you are not (or not only) a tax resident in Hungary. The agreement can help you gain exemption or reduced tax liability, where you might be granted a discount on your income tax. In order to apply for exemption or discount on income tax, you will have to obtain a tax residence certificate from your home country’s tax authority.
Taking dividends and paying social contribution tax in Hungary
In Hungary, the social contribution tax is 19.5%. Although tax residency does play a role in whether or not you are liable to pay these taxes, the following aspects are also determining factors:
- Individuals that have registered addresses in Hungary, those that are Hungarian citizens, immigrants in Hungary, permanent residents of the country, or those recognised as refugees can pay social contribution tax.
- You can also pay social contribution tax if you are an EU citizen that spends at least three months of the year in Hungary and you have registered yourself in the country.
- If you hold a stateless status, you are also able to pay social contribution tax.
Need more help?
Here at Hngary.com, our team of professional immigration lawyers can help you determine your tax residency status and whether or not you need to apply for a taxation treaty. We can also help you learn more about taking dividends in Hungary after you’ve set up your Hungarian company. Be sure to get in touch with our team today!
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