Tax on rental income in Ireland or Hungary?

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fender

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Is it best to pay tax on rental income in Hungary or Ireland? As there is a double taxation system in operation between the countries how is paying in one country better than paying in the other?

Any additional income I declare in Ireland would be taxable at the top level.

Any input would be appreciated.

thanks
 
You should pay tax in Hungary first and then deduct the amount paid there from the amount due in Ireland. Generally speaking, most investors will find that they have little or no further liability in Ireland as deductions can be made (mortgage interest, etc.). Do a search on this forum as there are already several threads dealing with this subject area.
 
You must by Hungarian law pay tax on rental income in Hungary.

If you are a tax resident in Ireland, you must also pay tax on worldwide income in Ireland.

You have to pay tax in both countries.

However, there is a double taxation treaty between Hungary and Ireland.
Any tax you pay in Hungary is deducted from your tax liability in Ireland.

In reality, you probably wont have to pay much tax in Ireland, because the tax you will have to pay in Hungary is high.
It's over 20% of the gross rental income.

In Ireland you only pay tax on the profit on the Hunarian property i.e the gross rental - costs.

The Hungarian tax would normally be greater than your Irish tax liability, therefore your tax liability in Ireland on the venture would likely be very small.

For example (the percentages are for illustration only)

Gross rent = 10'000
profit on venture = 3000
Hungarian tax liability = 10'000 * 20% = 2000
Irish tax liability = 3000 * 40% = 1200

Your Irish tax liability would be 1200 - 2000 = zero
 
OK - Thanks for your replies - much appreciated. I did not understand that it was compulsary to pay in Hungary - I thought there was a choice as to where the tax was paid.
 
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