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Old Nov 28th 2017, 11:37 am   #1
John22 Male
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Default Tax, pension and social cost advice

Hi all, I am new to this so please be gentle! I am a UK resident who has been offered a temporary job (12 months), by a Hungarian company to help set up a new factory. As the job is only temporary I am not committing to a new life in Hungary but have agreed to work 3 weeks in every 4 in Hungary. Returning to the UK for the 4th week unpaid. I have read that the tax rate is 15%, pension 10% and health and labour market contribution 8.5%. I have no issue with the tax as that seems only right and fair but I have read that you cannot claim a Hungarian pension unless you have contributed for 3 years so it seems I will be throwing 10% of my salary away! Even if I have misunderstood the 3 years it hardly seems worth contributing to a pension for 1 year. In my mind it would be better to contribute into a private pension scheme in the UK. Likewise with the health and labour market contribution if I need medical care for anything other than emergency I will seek it in the UK. I appreciate we all have a social responsibility but I would have thought in my situation it would be fairer to pay tax in Hungary but pay National Insurance in the UK. Can anybody offer any advice if this is possible? And also if it is possible to get tax relief on any private pension contributions like in the UK? I recognise that my situation does not make me an expat but any advice you can offer would be very much appreciated.
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Old Nov 28th 2017, 1:32 pm   #2
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Default Re: Tax, pension and social cost advice

At the (great) risk of being completely wrong, I believe that the 15% income tax rate you mention is 'flat-rate' i.e. payable on ALL your earnings, perhaps starting from a very low 80,000 HUF minimum.
Your best bet in the circumstances would be to make a completely separate, and flexible, low-cost private UK arrangement. Maybe you have something suitable in UK already, but you can't expect similar tax reliefs to UK from any Hungarian pension. Anyway, as you say yourself, 12 months of Hungarian pension wouldn't be worth the problem. You should be able to choose whether you pay taxes either in UK or in Hungary, but you couldn't separate out NI contributions alone. I'd suggest the Hungarian company could clarify the contract terms, but they'd clearly prefer Hungarian tax arrangements or let you do all the donkey work if you want something different.
It's always wise to consider worst-case medical situations; if we knew what the future held we'd all be rich!
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Old Nov 28th 2017, 4:06 pm   #3
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Default Re: Tax, pension and social cost advice

I cannot help as I am retired but I am sure you will get good advice & hopefully solutions from other contributors.

If not, you could consider a business I used, Helper's Hungary, in Buda, who have immigration experts, accountants, etc in their employ. I found them excellent, they saved me a lot of hassle. You can Google them.

PS My only connection with Helpers is as a satisfied customer, although we now count some of the staff as friends. I am not on commission!
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Old Dec 1st 2017, 12:29 pm   #4
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Default Re: Tax, pension and social cost advice

Thanks for the comments. Any advice is much appreciated. It is looking like I'll have to accept writing off 10% of my earnings...... I'll have to get one of those offshore accounts we keep hearing so much about!
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Old Dec 1st 2017, 1:49 pm   #5
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Default Re: Tax, pension and social cost advice

John22 - I think you should talk to the UK state pensions advisory service to see if your contributions to the Hungarian pension system can be transferred to the UK state pension system.

The reasoning for this is from the pensions advisory service - quote from their website
"Building up UK State Pension while living overseas

If you live in or pay into the social security system of:
  • country in the European Economic Area;
  • Switzerland;
  • country that has a social security agreement with the UK.
This may help you to build up a State Pension in the UK."



Could you please post any official replies here to help others in the future.

Oh and IMO I don't see much point in having an off shore account as all the money will be 'official' and presumably you will be keeping your UK account and depending upon how your salary is paid (e.g. into your UK account) and how your accommodation is paid or provided you may not need a Hungarian account

Last edited by Peter_in_Hungary; Dec 1st 2017 at 1:53 pm.
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