Using Foreign Companies for Tax Optimization

More and more, I run into the fact that many Slovak, Cypriot and other companies have been using tax optimization for years and think that everything is fine, they have paid off.

When I tell a client that you know if you’ve spent most of the year in Hungary, no matter where your company is anywhere in the world, you only have to pay dividend and EHO according to Hungarian law after your income from your company eyes wide open.

Foreign company does business in Hungary

In fact, if a foreign company does business in Hungary, signs a contract and works at all, then the foreign company will have its headquarters in the country and even as a company will have to comply with Hungarian taxation. (Okay, this is a bit more complicated when it comes to establishing a site, but the point is roughly.)

If the company is controlled from Hungary, the same is true: under Hungarian law, you have to tax in Hungary.

Not to mention that it is quite inconvenient to explain to the tax office if you have a foreign offshore account with your Hungarian company why you needed to use the Seychelles management service for $ 10 million. Many uncomfortable questions are asked, and if you are not prepared you will go to great lengths. (I have heard such cases being called in and asked many embarrassing questions ranging from the language of communication (“yes, do you speak English? Would you translate that for us?”)

Frequency and other issues of the management service

(“Describe exactly, what the company provided, evaluate it at Hungarian market prices and explain why it was worth paying the company so much. ”)

The saddest thing was that one of the clients paid the Slovak contributions, the 23% corporation tax and was still in tax evasion, while what he did was a KATA sole proprietor and EVA Kft. Combo could get away with much less tax and even properly tax would be. (Of course, Hungarian corporation tax is only 10% for smaller companies, you pay little in the case of EVA, and the tax burden on KATA is no more than 11%.) Many Slovakian companies flee to 23% tax .)

If the tax office proves that you spent at least half of the year at home in that year (cell phone information on your cell phone, credit card spending, apartment management, etc.) or you cannot prove with local accounts that the company is actually operating in Slovakia, for example you can stay and change your status for years and you will pay millions in penalties and taxes.

A Slovak company might be a wise choice

For example, because it has less VAT and does not charge the stock, for example, but it may not be worth it in a small way. If you live in your home country, you commit tax fraud, which is easy to prove.

Therefore, if you are already thinking about foreign tax optimization, talk to a specialist because you are doing amazing things. Don’t listen to anyone interested in starting a business. You need a tax advisor with international expertise, I am not . But be sure to talk to a specialist if you haven’t already. Don’t believe your Slovak accountant that it’s okay to pay the Slovak company tax. Including the “Director’s Fee” is a sweet little happiness for you while living in Hungary.

No Comments

Leave a Comment