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Expat tax question

Financial discussion for any financial queries for Expats
feinmann
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Expat tax question

#159896

Postby feinmann » August 15th, 2018, 5:10 pm

I am a UK passport holder and pensioner who has been resident in Hungary since 2013. I have no income other than my UK pensions, and for these income tax is deducted at source by HMRC.

I have created a UK-equity-focused high yield portfolio since I retired. During this tax year 2018/2019, I will receive more than my UK dividend tax allowance from my HYP investments.

Can someone please advise me on my dividend tax status both in the UK and in Hungary? Thanks in advance.

feinmann
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Re: Expat tax question

#160112

Postby feinmann » August 16th, 2018, 12:59 pm

Thank you for your prompt reply FB, and for suggesting the keywords: 'UK/Hungary dual tax treaty'.

Googling the above keywords produced this: https://assets.publishing.service.gov.u ... _force.pdf

I will take a look at this link in due course.

runnygum
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Re: Expat tax question

#162478

Postby runnygum » August 27th, 2018, 9:03 pm

.. if you are non uk resident you have no liabilty to further dividend tax than that which is taken as source.
In effect its disregarded income.. So you should only need to pay Hungary tax.

https://www.gov.uk/government/publicati ... ncome-2015

I fall into this bracket being non-resident for the last few years and not meeting the Statutory Residence Test https://www.gov.uk/government/publicati ... e-test-srt

DYOR and get final ok from Tax dudes, but there is light at the end of the tunnel if you take the right turns :)

BBLSP1
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Re: Expat tax question

#162509

Postby BBLSP1 » August 28th, 2018, 6:26 am

runnygum wrote:.. if you are non uk resident you have no liabilty to further dividend tax than that which is taken as source.
In effect its disregarded income.. So you should only need to pay Hungary tax.

https://www.gov.uk/government/publicati ... ncome-2015



Just be aware that in adopting this approach you are no longer entitled to a personal allowance to be set against any other UK income.

Bushman
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Re: Expat tax question

#163020

Postby Bushman » August 29th, 2018, 9:42 pm

runnygum wrote:.. if you are non uk resident you have no liabilty to further dividend tax than that which is taken as source.
In effect its disregarded income.. So you should only need to pay Hungary tax.



I fall into this bracket being non-resident for the last few years and not meeting the Statutory Residence Test

DYOR and get final ok from Tax dudes, but there is light at the end of the tunnel if you take the right turns :)


Very useful information. Thanks for sharing.

runnygum
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Re: Expat tax question

#163063

Postby runnygum » August 30th, 2018, 5:30 am

BBLSP1 wrote:
Just be aware that in adopting this approach you are no longer entitled to a personal allowance to be set against any other UK income.


A good reason to structure things so you only get interest and dividends...

feinmann
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Re: Expat tax question

#163592

Postby feinmann » September 1st, 2018, 6:06 pm

Thanks to all of you who have kindly responded.

I have written to HMRC asking for clarification in my case. Despite several attempts last week, it proved impossible to be put through to a tax advisor via the PAYE call centre as the advisors were 'all so incredibly busy'.

An accountant here in Hungary has since advised me of the following:

"If for example you get 4000GBP in UK-sourced dividends this tax year, the tax process starts in the UK; after that it will be continued in Hungary.

So, if you pay 2000*7.5% in the UK, then the tax maths would be in Hungary: 4000*10% or 15% = (400GBP or 600 GBP); (400GBP or 600GBP) - the paid UK tax of 150 GBP; result: (250GBP or 450GBP ) tax in Hungary."

She did not inform me what determines the 10% and 15% rates. If she is correct, then my resulting dividend tax bill ignores the UK exemption and instead reflects the Hungarian dividend tax rate. Not easy this HYP lark IMHO.

carioca
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Re: Expat tax question

#164923

Postby carioca » September 7th, 2018, 3:36 pm

I am no tax expert, and I know next to nothing about Hungary, but my situation is in some way comparable to yours.
I do not hold a UK passport, but that shouldn't make any difference. In my experience, taxmen aren't interested in your passport; they just want your money.

I live in Brazil and receive income from investments in the UK and Germany. According to Brazilian law, I have to declare my worldwide income. (That seems to be pretty much the universal standard.) The form has a separate section for foreign income or "income received from abroad" where you also enter any taxes that have been withheld.
Your calculations might give the impression that you compare the tax you would have to pay in Hungary on your UK income against the tax you have already paid and, if the latter is lower, pay the difference to the Hungarian authorities. And then, if you receive income from somewhere else, you do the same calculation for each country.
The Brazilian system does not work like this. You add up ALL you overseas income and put ALL the tax already paid into another bucket. Then you calculate additional Hungarian tax for the totals. I suspect that this is no different from Hungary but your description wasn't 100% clear.

This calculation ignores any tax exemption that UK residents may benefit from. The reason is simple. There is no way your country of residence can be aware of all the tax benefits or loopholes that exist around the world. By the same token, if I were a UK resident, HM Gov would ignore the fact that the income from some of my Brazilian investments is tax free. So, income from your PEP, ISA, or whatever else there is nowadays, would go into the general income bucket.

And that's basically it...


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