Taxation in Hungary: what are the advantages for digital nomads?
Hungary has become an increasingly attractive destination for digital nomads, mainly due to its relatively favourable tax regime and low cost of living compared to other European countries. In this article, we'll explore how taxation works for digital nomads in Hungary, focusing on the advantages offered and the legal provisions that regulate taxation in the country.
Tax system in Hungary
In Hungary, personal income is subject to a flat tax rate of 15 per cent, which is an advantage over other countries with progressive scales. In addition, capital gains tax is also flat, with a rate of 15 per cent. For digital nomads, this provides predictability and financial stability, making tax planning easier, especially for those who work remotely for foreign companies.
Another important point is the welfare and health system. Tax residents in Hungary are obliged to contribute to social security, with a contribution rate that varies between 13 per cent and 18.5 per cent, depending on the source of income. However, for digital nomads who don't plan to settle down long-term, there are bilateral social security agreements that can help avoid double contributions.
Tax residency rules
To become a tax resident in Hungary, you need to spend more than 183 days in the country during a tax year, among other legal conditions. It is therefore essential for tax residents to consider the international treaties that Hungary has in place to avoid double taxation. These treaties ensure that income is not taxed in both countries, as long as the digital nomad can prove their tax residency abroad.
Choosing Hungary: A Lifestyle Perspective
Hungary is not only a country with a favourable tax regime, but it also offers a rich cultural experience and an affordable base for those looking for a more flexible life. Many digital nomads find Hungary an opportunity to experience a new lifestyle without the high financial costs that other destinations can impose. This balance between professional freedom and financial stability is an important attraction for those who work remotely and constantly explore new horizons.
Relevant legal provisions
Taxation in Hungary is mainly regulated by the Personal Income Tax Act (Act CXVII of 1995). This legal provision establishes the basis for the flat rate of 15 per cent and other tax conditions applicable to tax residents and non-residents.
In addition, Hungary has an extensive portfolio of treaties to avoid double taxation, making it essential for digital nomads to check the applicability of these agreements, especially in the case of income from foreign sources. Among the main countries with bilateral agreements are Germany, the United Kingdom, the United States and France.
Final considerations
Hungary, with its simplified tax regime and numerous tax advantages, offers an excellent option for digital nomads looking to optimise their tax planning. The combination of clear legislation, well-established international agreements and a dynamic cultural environment makes the country a strategic choice for those who want to make the most of the flexibility that digital nomadism provides.
However, in order to enjoy these benefits, it is essential to carry out tax planning with a specialised lawyer in order to avoid double taxation and tax evasion.
If you are interested in hiring professional legal services related to Tax Planning, we are a law firm specialising in the subject. To do so, please contact us by e-mail: contato@trpuppioadvocacia.com.br, or by WhatsApp.
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