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Old Jun 28th 2017, 8:03 pm   #1
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Default Declaring assets held outside Hungary?

I am considering moving permanently to Hungary, and am undertaking some basic investigations. I have been looking at the following UK Government web page, which contains some useful information:

https://www.gov.uk/guidance/living-in-hungary

Around two-thirds of the way down the page (under "Taxation"), there is one requirement that took me by surprise, and that is the obligation to declare details of assets held outside Hungary:

"In accordance with Hungarian and international law, all residents in Hungary (nationals and non-nationals alike) are required to declare assets or groups of assets held outside Hungary. Assets may include bank accounts, securities, rights, insurance, annuities, property, etc. The declaration is a separate exercise to the annual tax return.

Severe penalties for incorrect, incomplete or late reporting can be incurred and the legislation also means that criminal charges can be brought in the case of non-compliance. The requirement and potential penalties are in line with standard international tax practice".


Having read this I started searching on the internet (in English) for further information. I could find very little, but did come across the following:

https://dailynewshungary.com/bill-pr...bank-accounts/

This web page mentions only a requirement to declare bank deposits, whereas the UK Government web page states the requirement goes further, to include all financial assets.

May I please ask those of you living in Hungary what the full story is behind this. Is the information contained on the UK Government correct?
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Old Jun 29th 2017, 10:15 am   #2
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Default Re: Declaring assets held outside Hungary?

Quote:
Originally Posted by teejaydee View Post
I am considering moving permanently to Hungary, and am undertaking some basic investigations. I have been looking at the following UK Government web page, which contains some useful information:

https://www.gov.uk/guidance/living-in-hungary

Around two-thirds of the way down the page (under "Taxation"), there is one requirement that took me by surprise, and that is the obligation to declare details of assets held outside Hungary:

"In accordance with Hungarian and international law, all residents in Hungary (nationals and non-nationals alike) are required to declare assets or groups of assets held outside Hungary. Assets may include bank accounts, securities, rights, insurance, annuities, property, etc. The declaration is a separate exercise to the annual tax return.

Severe penalties for incorrect, incomplete or late reporting can be incurred and the legislation also means that criminal charges can be brought in the case of non-compliance. The requirement and potential penalties are in line with standard international tax practice".


Having read this I started searching on the internet (in English) for further information. I could find very little, but did come across the following:

https://dailynewshungary.com/bill-pr...bank-accounts/

This web page mentions only a requirement to declare bank deposits, whereas the UK Government web page states the requirement goes further, to include all financial assets.

May I please ask those of you living in Hungary what the full story is behind this. Is the information contained on the UK Government correct?
Trying to get some further (local) clarification on this, will come back to you.
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Old Jun 29th 2017, 11:16 am   #3
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Default Re: Declaring assets held outside Hungary?

In terms of the bank account it is true. UniCredit sent me an email message last year stating changes and the reportings to the UK, mainly to do with money laundering laws etc. The same is true of Hungarians. They are supposedly reported to their taxman by the UK banks, but whether or not these situations/reportings actually happen is another story - I cannot see either tax offices wanting more workload (i.e. the reporting of millions of bank accounts). Even if everyone was a money launderer, they do not have the man power and other resources to chase everyone up. And even if they could, it would take them decades if not longer to do so. Hence why UK benefits cheats for example (small fish) and big players like Google among others get away with their crimes.
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Old Jun 29th 2017, 10:35 pm   #4
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Default Re: Declaring assets held outside Hungary?

To add a little more to my original posting, this seems to be a requirement to declare the value of assets held outside Hungary. For Hungarian tax residents there has always been a requirement to declare income received from worldwide sources, and pay tax on that income (subject to double taxation relief), and it is known that payers of income (banks, pension providers, etc.) are being forced to provide details of income paid to non-resident account holders. For example, UK banks will report to the Hungarian tax authorities details of interest paid to Hungarian-resident account holders.

The text in the UK Government web page that I linked to claims there is now a need to declare asset values (regardless of any income earned from those assets). This would concern me because in recent years both Spain and Italy have introduced similar financial asset reporting requirements. In Spain the scheme is known as the Modelo 720, and in Italy it is known as IVAFE.

There is a wealth tax in Spain, and the value of residents' worldwide assets are taxed accordingly (hence the need for the resident to supply details annually). In Italy there is no wealth tax, but there is a tax on the value of financial assets (if their value exceeds a certain amount). Again, this is why the value has to be reported annually.

When I read that Hungary is introducing a requirement for residents to report annually the value of their financial assets, I suspect that the reason for doing so is that a tax will at some stage be levied on the value of those assets. Just to emphasize, this would be a tax on financial asset values, not on the income from those assets.
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Old Jun 29th 2017, 11:34 pm   #5
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Default Re: Declaring assets held outside Hungary?

I asked my HU GF about it and she says it is more to do with money laundering. Example: You are English with your English house. No problem. You then buy a house in Hungary. The Hungarian taxman has the right to ask "How did you get the money for this Hungarian house?". Unfortunately, criminals buy Hungarian property through money laundering, so we "normal people" have to suffer the consequences like laws such as you mention above.

When the Hungarians return after Brexit, many will buy property and pay off existing property whereby they (if asked by the HU taxman) will simply show their UK bank statements, p45, payslips etc to prove their English money (wages) paid for their mortgage or property.
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Old Jun 30th 2017, 12:16 pm   #6
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Default Re: Declaring assets held outside Hungary?

Quote:
Originally Posted by teejaydee View Post
When I read that Hungary is introducing a requirement for residents to report annually the value of their financial assets, I suspect that the reason for doing so is that a tax will at some stage be levied on the value of those assets. Just to emphasize, this would be a tax on financial asset values, not on the income from those assets.
There has been talk in the past about a property tax but nothing has come of it and IMO it probably won't happen because those in the government own too much property - it would be a bit like turkeys voting for Christmas !!
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Old Aug 3rd 2017, 5:58 am   #7
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Default Re: Declaring assets held outside Hungary?

I was concerned about the messages in this thread as our understanding uptil now was that we need report to hungarian authorities only income earned in Hungary (we dont plan to earn in Hungary by the way). As we are in full compliance of all tax laws in our current country of residence (India) we were happy to not do double reporting.
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