Budpest - management - tax

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oslo

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I have 2 appartments in Budapest (vii & v districts). Registered as a company. From reading on this forum, I have been onto my management company in relation to paying tax. I have been hounding them for the last 4 years, and now discover that I have loads of tax to pay. The accountant is with this management company, but never requests for any information. I also read that others on this forum have problems with managements companies, I was in the process of moving away from them. My mortage for the appartments is here in Ireland, so tax is paid here in relation to that. I'm also paying tax in Budapest, which I think is a tax for the area you have the appartment??? I'm now transferring the rental income home to my account here, is that the correct thing to do, as here I am a private individual and a company transferring it. Will this cause problems for the tax system in Hungary? Or what is the best advise? I'm travelling out this Thursday to sort it out and want to have the correct approach. I find the management company makes loads of promises and will sort all this out for me, but nothing never happens, I phone and text them everyweek and you have to be constantly on there backs and this is frustrating/
 
I'm no expert on Hungarian tax laws, but it occurs to me that if you bought these properties within a company structure with money raised by mortgaging other property in Ireland, then you effectively loaned the money to the company. In that case, rents paid to you can be treated as repayment of loans and are not subject to tax.
As I said, I'm no expert, but that's my thoughts on this matter; hope it helps.
 
>so tax is paid here in relation to that

There is no "here" and "there" in the World of international tax between Ireland and Hungary, because of a double taxation agreement. Many of the taxes applicable to property have to be declared and paid in BOTH countries, but you can then claim relief on the tax already paid in the other country. There are also different rules as what can be offset against which tax in which country, and this also differs between private and company taxes. You need some professional advice, and far more detailed answers than you'll probably get here.

see [broken link removed] especially articles 6, 7, 10, 13, 16, & 23.
 
If you have a company in Hungary, then that company would need to pay tax separately to you paying tax as an individual. You can offset your company's tax liability with certain company expenses, but you'd need proper tax receipts for each expense.

As you've probably noticed by now, it's best to have an independent accountant, who isn't tied to a particular management company. A Hungarian company accountant needs to do quite a lot of work in relation to company and tax administration and it's important to provide them with all recent invoices/receipts on a regular basis - at the very least before the end of each quarter.

The fact that you have a mortgage privately in Ireland is only of relevance in that you were able to give your company a loan to purchase your properties. This can't be used as a company expense. It would possibly be preferable to have a company loan in Hungary rather than a personal loan in Ireland, but this all depends on your personal circumstances. (The Hungarian company loan, for example, would more than likely have a higher interest rate, although, unlike your Irish loan, it could be used to offset your company's income).

If you transfer profit from the Hungarian company back to your personal account, then you would be liable for Irish personal income tax on this. You should check the exact details of this with your Hungarian and Irish accountants, as you would obviously be invoicing your company for this amount, which may be used to somewhat reduce your company's tax liability.

Best of luck with it.
 
budapest said:
If you transfer profit from the Hungarian company back to your personal account, then you would be liable for Irish personal income tax on this. You should check the exact details of this with your Hungarian and Irish accountants, as you would obviously be invoicing your company for this amount, which may be used to somewhat reduce your company's tax liability.

Best of luck with it.
Click to expand...
Again that depends. You can take money out of a company via a director's fee on the basis of a management contract, as a salary for working for the Hungarian company as an employee, as a share dividend on retained profit, as an invoice for specified services charged hourly from yourself working as an employee of an Irish company, as interest to service a fixed loan .......
 
Yes, the poster's Hungarian company accountant should be able to advise in relation to the best way to access these profits (if any). A lot depends on his personal financial circumstances, but by far the most typical situation would be if he transfers rental income earned by the HU company back to himself as an individual (director of and not employed by the company), then an invoice should be provided to the company and he would pay personal income tax in Ireland on the profits (if any). His Hungarian company accountant should be able to advise in more detail, considering his company's as well as his personal financial situation. It doesn't seem to make sense to take any money from the company before he knows exactly how much profit there is or isn't.
 
I have an apartment in Budapest My agent has said that the tax rules have changed from 2007 to 2008 in respect of deductions which can be claimed in 2007 I could claim condo fees ,cleaning etc using the two rate rule ie 1700000 @18% the balance of the rent received less deductions such as condo fees etc .Now for 2008 he has said that this has changed I am a new member so perhaps this is not the correct way to ask a question but I could not figure out any other way Thanks for any help anyone can give me
 
Many thanks for all responses. Have been to Budapest in the meantime. Appartmently company rules have changed in Hungary, and if you are now purchasing you don't need to set up a company. For us to get out of this now would cost more then it is worth.

We have an independent accountant and this seems to be working, but I find you have to be in contact with them frequently to keep them on the job.

Management Company is like this also. If you phone them at least once a week, reminding them of you, they keep on the job also, but once you sit back nothing happens.

I go out at least 2 a year, promises made by management never appears to be carried out, always some excuse, that is staff have left, client left appartment etc.

Presently I am talking to our accountant here in relation to what previous respondee have said and what information I received from Budapest.
Thanks
 
I have a leaseback agreement for an apartment I bought in Budapest. The management company emailed me today to say they have transferred 6 months' rent but have withheld 25% due to a change in the tax law in Sepember 2009. I had told them to pay the rents gross as I am fully up to date with my taxes in Hungary and my Hungarian accountant has said I have to pay tax in advance every year.
They had told me a few weeks ago I needed to send them a letter stating that I paid tax in Hungary and they then said my letter was 'not sufficient'. I had already sent a copy of my tax ID card and my accountant's contact details. I don't have a company, I bought as an individual.
Does anyone know about this new law and if the management company is entitled to do this? I have asked them a few times for information but they haven't provided any.
 
If your apartment is rented to a Hungarian company, then it (your tenant) would need to hold onto the 25% tax and pay it on your behalf in advance.
 
Thanks for your information. I had been trying to read up on the new tax rule but I didn't find anything.
My accountant's understanding is that they should have withheld the tax in accordance with how I make the returns which she had explained to them- 'It seems they deducted the tax according to the general rules. If a company hires the apartment then they have to deduct some tax, and since we make the tax return they should have deducted the tax advance according to the method as we calculate the tax. (that is 10% of the rental fee is cost and 90% is the tax base).' There probably isn't much difference between them.
 
According to my own management company it is true that you can deduct expenses against your tax, even if you are a not a company. Apparently tax is 25%, but you can pay far less if all your expenses are declared, such as management fees, furnishing, travel etc. At my previous management company I paid 25%, now I'm paying about 10%. The other company did not even know about this change!
 
Hi Maranello,
Could you please let me know what Managment Company you use? I currently use CE Properties!
 
Hi Maranello
I own a property in Budpest and I need to submit my tax return soon. I was under the impression that you couldn`t offset any expenses against the 25% on the rental income, unless registered as a company. Does anyone else have information on this?

Thanks
 
tax return on rents I didn't get

I’d appreciate some advice on this re Hungarian tax:
I didn’t receive any rent in 2010 from leaseback managers of my apartment in Budapest as they were in receivership. My accountant did a 2010 tax return for me last year, based on the rent invoices issued to the management (rents receivable?) and said that a revised tax return would be done once the receiver confirmed that the rents weren't recoverable, and this was done in December 2011.
The tax office began an audit in November 2011, presumably because no advance tax was paid in 2010 as I didn't get any rent, though it appeared as though I had. The accountant is charging €100 +VAT for handling this (in addition to a yearly fee of €150 + VAT). Does anyone know if this was the correct approach, and if these fees are reasonable? Thanks for any advice.
 
Not sure of the details involved but around 60 euro + VAT is normal for a standard tax return for foreign rental income in Bp. It's very straightforward if you know what you're doing.
 
Accountants in Budapest

I would appreciate some advice on fees charged by accountants in Budapest to make returns on one apartment in name of company, At moment my monthly fee are €100 approx, There is nothing happening with company accounts as apartment is not rented, Can you pm me name of your accountant, if they are more reasonable.

Thanks
 
Hi jgm,

That's very expensive. I would happily PM you a contact, but you don't seem to have private messaging enabled.
 
Hi budapest,

I'm in the same situation. I'd be grateful if you could pm me the contact that you are referring to. Thank you very much in advance.

Sunboy
 
We are registered as a company in Budapest. 3 apparments, Districts 5 (2 appartments) and District 6.

We pay a management fee of 10% plus the usual expenses. We have an accountant and she is €50 per month.
One appartment is renting for 550 per month, the other400/ month but not all year as to students and the other appartment is more vacant then rented, at present 250 / month and that is on VACI Street, the main street, (on first floor, so noise can be heard coming from steet).

Any way, my question is, my accounts here in Ireland are due for submission tomorrow, when talking to or Irish accountant, he asked about profit from Budapest appartments, and I sent him spread sheet of all expenses, including accountant and taxes. in 2011, the income from the appartments was €6000 after all fees paid out there. I normally transfer it back here as Mortage over here. The accountant tonight stated I have now to pay €1800 tax on it here. This to me doesn't seem correct, as already paid tax??
Any advice?
 
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