If you own a Hungarian company, you have to pay certain taxes and contributions after the dividend you take based on whether or not you are a tax resident in Hungary.
If you are a Hungarian citizen, and you have no registered address in other countries, but in Hungary – in other words, you have a “habitual residence in Hungary”, you are presumably a tax resident in Hungary. If you are not sure, just ask for a “tax residency certificate” from the Hungarian tax authority. Similarly, if you are a tax resident of another country, the local tax authority can confirm this with a certificate.
Your tax residency will need to be considered when you want to take a dividend from your Hungarian company. The most important forms of tax you will probably be required to pay are the income tax and the social contribution tax.
Income tax in Hungary is 15% in 2019. If you are a tax resident only in Hungary, you will be required to pay income tax in Hungary – including after the dividend you take from your company. If you are not or not only a tax resident in Hungary, double taxation treaties (tax treaties to avoid double taxation)between your (other) country of residence must be checked. These agreements may grant total exemption or a reduced tax liability (e.g. 10% tax instead of 15%).
In order to get total or partial exemption from paying income tax in Hungary, you must acquire a tax residence certificate from the tax authority of your country of tax residence. Based on that and the double taxation treaties, you might be required to pay income tax in Hungary in full, partially or not at all.
The social contribution tax in Hungary is 19,5% in 2019. Whether you must pay the social contribution tax depends not strictly on tax residency, but on the following:
1. You are to pay the social contribution tax if you have a registered address in Hungary, if you are a Hungarian citizen, you are an immigrant in Hungary, you have permanent residency, or you are recognized as a refugee; OR
2. You are to pay the social contribution tax if you are an EU citizen who spends more than 3 months in Hungary each year and therefore has registered themselves in Hungary (holds a registered address in Hungary); OR
3. You are to pay the social contribution tax if you hold a stateless status
Click here. For a more detailed description on how to determine tax residency, what double taxation treaties are, and what else tax residency influences.
Click here for a concise description on how to calculate dividend tax in Hungary.
Click here for some basic information on taking dividend in Hungary.
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