Termination of "double taxation treaty" with Hungary?

    I'm US/Canadian/EU citizen. Hungary being one of them. I REALLY hope to be able to move back to the EU and never go back to the US ever again. I speak fluent Hungarian and was planning and moving back to Hungary but I am worried what does this termination of "double taxation treaty" with Hungary mean exactly.
I assume this means if, let's say someone earns 5k/month income, that they will now be DOUBLE taxed? So this person would be taxed by the US and Hungary... so taxed twice... pay twice the amount of tax? Crazy!

Very concerned about this. If anyone has simple clarification would be greatly appreciated. Thanks.
   

    -@juliet1980

Pretty much that's how it will be.    US citizens are one of the rare nationalities that taxes their citizens wherever they are. In your case, you submit a tax return to the IRS every year.   

Normally and generally speaking (I don't know the US-HU DTT)  it wouldn't make too much of a difference because of the DTT as you could offset your US tax paid there on your income in Hungary. 

But if there's no DTT, then they both want their cut.   And they don't care what is going on in the other country.

One way out of this is to renounce your US citizenship and then they'll no longer be interested in you.  But that's going to be hard to do as the US punishes people to do that.  Thousand each year renounce simply to avoid being taxed in the US but usually they are multi-millionaires.

It's very unusual to terminate such a long standing agreement.   Probably just politics.

@fluffy2560

Hi, thanks for your reply. Yes I am very aware that US has citizenship based taxation. Trust me... I would LOVE to renounce US citizenship and have looked into it many times in the past. I am not rich, at this time I don't see how I can do that anytime soon. It would be a nightmare with my VTSAX/VTIAX/VBTLX portfolio at Vanguard. I am not rich.

If this DTT stays terminated and I would indeed be double taxed then there is NOWAY I could ever move back to Hungary! I am Hungarian. Hungarian is my native language.. I would like to move back there but this would be a deal breaker.

How long has DTT been terminated? It appears it was terminated way back in the past previous years as well? This is very concerning to me... you know what will freeze over before I ever allow myself to get double taxed!

Just to clarify. You said "it wouldn't make too much of a difference because of the DTT as you could offset your US tax paid there on your income in Hungary."

So am I freaking out for nothing? It seems like I would be paying twice the amount of taxes, even if I "offset my US taxes paid" than what I would have otherwise paid if the HU/US DTT had not been terminated. I cannot afford to be double taxed. I am barely staying afloat as it is!

    Just to clarify. You said "it wouldn't make too much of a difference because of the DTT as you could offset your US tax paid there on your income in Hungary."So am I freaking out for nothing? It seems like I would be paying twice the amount of taxes, even if I "offset my US taxes paid" than what I would have otherwise paid if the HU/US DTT had not been terminated. I cannot afford to be double taxed. I am barely staying afloat as it is!         -@juliet1980

You should ask a tax advisor familiar with the US-HU DTT as this is the only way to find out the current rules. 

I only know in general how it works.

$5K a month is substantial income.  You'd have to calculate if the cost of renouncing US citizenship would save you anything as you'd have to pay in HU.   

You could also live here less than 185 days a year and not become a tax resident (proving you're not resident is not that easy - I'm stating a simple case).   

Spend HU winter in Florida and HU summers in HU.   i.e. you'd be a snowbird.

"But if there's no DTT, then they both want their cut. And they don't care what is going on in the other country."

That's plain wrong.

Even without a tax treaty the US and Hungary each allow a foreign tax credit against taxes paid to the other country in order to avoid double taxation.

But the operation of these rules is complex and may not fully cover all cases. You really need to talk to a tax advisor who can advise on your particular situation.

    "But if there's no DTT, then they both want their cut. And they don't care what is going on in the other country."That's plain wrong.Even without a tax treaty the US and Hungary each allow a foreign tax credit against taxes paid to the other country in order to avoid double taxation.But the operation of these rules is complex and may not fully cover all cases. You really need to talk to a tax advisor who can advise on your particular situation.        -@zif

No, it's not plain wrong.

It's just heavily caveated.

There are exceptions but without the DTA, it's more like optionally applied as either side wishes.   

The tax authorities can just ignore what is going on elsewhere if they so choose.  For example, they don't have to take into account deductions for non-resident tax if they feel like it.

With the DTA in place, then the taxpayer would know better their position AND it also says how each side is expected to cooperate over issues of say, tax residence. 

But indeed, a tax advisor would be up with the latest DTAs or lack thereof, so you got that bit right.

Stop. You gave her truly bad advice.

    Stop. You gave her truly bad advice.        -@zif

What bad advice?  Contact a tax advisor?  Be specific.

I've read a few DTAs, most of them are OECD model, so I know what those agreements cover. 

You?

OMG this a NIGHTMARE. So complicated. Life is extremely very very very SHORT. Too short for all this headache. I don't make 5k/month. I was just using that as an example.

I'm also Swedish citizen and going to visit Sweden/Norway for 3 weeks in November. I love cold weather and being near mountains. I am a cold weather person. Hot weather makes me miserable I cannot stand it!

Maybe I should aim for Norway or Sweden for now because at least the DTT is active there? Perhaps this whole absurd DTT issue with Hungary will resolve in the next decade or so. 

The crazy part is that in the US my health insurance is $600/month with high deductibles and co pays. If I get MRI I still would need to pay for 50%! Considering the criminally high costs of health care in the US it appears that even if Sweden/Noways taxes are higher I would still be paying LESS to live there than in the US!

Not to mention less headache because then I would not have to fight with insurance companies denying claims. Medical debts wiped me out putting me into massive debt in the US. Devastating.

    OMG this a NIGHTMARE. So complicated. Life is extremely very very very SHORT. Too short for all this headache. I don't make 5k/month. I was just using that as an example.I'm also Swedish citizen and going to visit Sweden/Norway for 3 weeks in November. I love cold weather and being near mountains. I am a cold weather person. Hot weather makes me miserable I cannot stand it!Maybe I should aim for Norway or Sweden for now because at least the DTT is active there? Perhaps this whole absurd DTT issue with Hungary will resolve in the next decade or so.  The crazy part is that in the US my health insurance is $600/month with high deductibles and co pays. If I get MRI I still would need to pay for 50%! Considering the criminally high costs of health care in the US it appears that even if Sweden/Noways taxes are higher I would still be paying LESS to live there than in the US! Not to mention less headache because then I would not have to fight with insurance companies denying claims. Medical debts wiped me out putting me into massive debt in the US. Devastating.         -@juliet1980

Well, you know what to do and you're answering your own question in a roundabout way.

Sounds to me you need to sell up and leave for somewhere else.   Cutting your ties with the USA might be part of those plans.  You need to take advice on that.

Sweden would be quite nice I imagine but the long winter is not that great. Nice scenery though and amiable people.  They do have social issues in the big cities.   Norway is super rich because of their oil/gas wealth.  What that means for you, no idea.  Neither are nirvana.

@fluffy2560 but Norway is super expensive.

    @fluffy2560 but Norway is super expensive.         -@SimCityAT

Yes, it is but due to them being loaded, I think their level of services and HDI (Human Development Index) rating must be somewhere near Pluto.  I didn't check the HDI for them but it must be top end.

Update: They are No. 2, Switzerland is number 1.  Click here

I am also Canadian citizen. But I cannot move there because you have to be rich to afford house there. The real estate prices there are INSANE! I had to scratch Canada off the list because of it.

What makes Norway so expensive? I never eat out. I never travel. It's not my thing. I am a hermit by choice and massive homebody. Is it the real estate that makes Norway so expensive? What if someone already owns cabin there in the countryside. I understand eating out and food in Norway very expensive.

I really love growing some of my own food but I wonder is climate in Norway ok for this?

My main issues are healthcare costs in the US are killing me. It angers me. I want nothing to do with it anymore. If I was rich, then no problem, but that that's not the case. I need cold weather and I love snow. So Sweden or Norway seems like good options. I have uncles and cousins who live in Sweden/Norway.

    I am also Canadian citizen. But I cannot move there because you have to be rich to afford house there. The real estate prices there are INSANE! I had to scratch Canada off the list because of it.
What makes Norway so expensive? I never eat out. I never travel. It's not my thing. I am a hermit by choice and massive homebody. Is it the real estate that makes Norway so expensive? What if someone already owns cabin there in the countryside. I understand eating out and food in Norway very expensive.

I really love growing some of my own food but I wonder is climate in Norway ok for this?

My main issues are healthcare costs in the US are killing me. It angers me. I want nothing to do with it anymore. If I was rich, then no problem, but that that's not the case. I need cold weather and I love snow. So Sweden or Norway seems like good options. I have uncles and cousins who live in Sweden/Norway.
   
    -@juliet1980

Like I said, you know what you have to do.

First step- get your Swedish passport renewed or issued.

Why not ask your cousins and uncles about life in Scandinavia?

They are on the ground and have the latest information.

@fluffy2560

Will do... I haven't been there in over 20 years. So it should be interesting! Thanks.

Give you an idea of prices in Norway

Substantial detached house in a family-friendly location - large plot of 1.2 acres - Garage

€262,299.82 (NOK 3,065,750)

Features worth highlighting:

• 2 spacious living rooms which together make up 64 square meters.
• 3 bedrooms of good sizes.
• Very good storage options in all stalls.
• Basement living room of 22 sqm.
• Winter garden.
• The property has very good solar conditions.
• Garage.
• Large plot of 1.2 acres with a nicely landscaped garden.
• The property has a sheltered location on Værnesmoen.

The property is a 5-minute walk from the center of Stjørdal and Stjørdal train station. Grocery store is only 300 m from the home.

There is a nursery school, primary school, secondary school and upper secondary school within walking distance of the property.

A short drive to Stjørdal marina and several of Stjørdal's beautiful beaches.

    Give you an idea of prices in NorwaySubstantial detached house in a family-friendly location - large plot of 1.2 acres - Garage


€262,299.82 (NOK 3,065,750)

Features worth highlighting:
2 spacious living rooms which together make up 64 square meters.
3 bedrooms of good sizes.
Very good storage options in all stalls.
Basement living room of 22 sqm.
Winter garden.
The property has very good solar conditions.
Garage.
Large plot of 1.2 acres with a nicely landscaped garden.
The property has a sheltered location on Værnesmoen.

....
   

    -@SimCityAT

That's quite cheap compared to even here.   

I looked at the centre of Malmo, Sweden.  Nice city centre flats to buy and not that expensive, 

100K EUR for a one person 34m2 place.

@fluffy2560

Yeah I was quite surprised at the price, I was expecting it to be a lot more. It would be double the price or possibly more around here, something with that amount of land.

But in general a lot of things have to be imported, so that adds on the cost and tax on goods is more.

    @fluffy2560Yeah I was quite surprised at the price, I was expecting it to be a lot more. It would be double the price or possibly more around here, something with that amount of land. But in general a lot of things have to be imported, so that adds on the cost and tax on goods is more.         -@SimCityAT

Yes, it was indeed surprising.

That house looks nice and it's on the outskirts of Trondheim  and next to Trondheim airport.  I looked on Streetview and the countryside reminds me of northern England or lowlands of Scotland.

I expect the weather is cold and snowy for 8 months of the year.  Still, people are organised for that.  Trondheim is far north, almost Artic circle.  Be like Alaska or Northern Canada maybe.  People in Canada who have money move south in the winter and spend their winters in Arizona and places like that.  Some have these giant RVs and live in those.  They are "snowbirds".   Our OP could be a snowbird of sorts - half the year in Sweden and half the year in the USA or somewhere like Puerto Rico.  I've heard a lot of US people on a pension like Costa Rica.

        Give you an idea of prices in NorwaySubstantial detached house in a family-friendly location - large plot of 1.2 acres - Garage€262,299.82 (NOK 3,065,750)Features worth highlighting:2 spacious living rooms which together make up 64 square meters.3 bedrooms of good sizes.Very good storage options in all stalls.Basement living room of 22 sqm.Winter garden.The property has very good solar conditions.Garage.Large plot of 1.2 acres with a nicely landscaped garden.The property has a sheltered location on Værnesmoen.....        -@SimCityAT

That's quite cheap compared to even here.   

I looked at the centre of Malmo, Sweden.  Nice city centre flats to buy and not that expensive, 

100K EUR for a one person 34m2 place.
   

    -@fluffy2560

Malmo sounds cheaper per sq; meter then Budapest is.

My husband lived in Malmo in 1971. The extreme cold got to him so he left even though he liked Sweden overall.

Very cool keep to themselves sort of people there; Not overly friendly but not unfriendly either.

IDK though, watching in the past some current videos of the area looks like it has gotten run down and dangerous.

Too much crime there now.

Perhaps a small village in Sweden would be nice, no idea about the work situation there.

Have an American friend who lives with her Swedish husband in a village. He is on disablity there but she is still having immigration issues even though married to a citizen. Perhaps him living off the dole is one issue for her? IDK;

They do have a very liberal medical system there. They go out of their way with care.

My husband had a major operation on his broken arm in Malmo.

They even found him a nurse that spoke Hungarian.

They set him  up in a sort of shared living arragement with other refugees, xlean, warm and modern. Gave him pocket money although it was not much. He found a job on the side working in a hotel for a older Hungarian lady as a bar helper. Broken arm so limited as to what work he could do;

As a young single man he found it easy to get the attention of ladies but he at 5 feet 10 inches said he felt like a small child next to most of them.

He always has to bring up the ladies in every country he has lived in. Like that is how one should judge a culture! Funny, not so funny!

I would defo think of Sweden though if you have ties there already.

Now that Trump has been elected (no, I didn't vote for him), I suppose this whole subject is moot. I imagine Trump and Orbán will be hammering out a new bilateral tax agreement sooner than later.

Now that Trump has been elected (no, I didn't vote for him), I suppose this whole subject is moot. I imagine Trump and Orbán will be hammering out a new bilateral tax agreement sooner than later. - @rxcats

I doubt it's even on their radar.  This was on the cards for cancellation years ago.  Unless it hits either of them in their pockets, they won't care one single bit.  Both of them can currently do what they want so it has little relevance to them personally. In any case, one of Trump's loopy shoe-in candidates for cabinet positions wants to dismantle the IRS.   Then it's definitely moot. 

On the other hand, Trump will never be able to carry out a lot of his threats as it will take longer than he's in power and not everyone will roll over quite so easily.  Challenges to some of his ideas are already being drafted ready for the courts should he try it on. That will take years to resolve. And not all Republicans agree with dismantling the state.  It's definitely not clear cut.

Overall it seems mainly a lot of his policies seem to be voter directed hyperbole.  Case of many turkeys voting for Christmas.

Trump is more concerned about raising tariffs, and the deportation of people of and execution of people. What else did he say, he was going to end all the wars on day one.

Trump is more concerned about raising tariffs, and the deportation of people of and execution of people. What else did he say, he was going to end all the wars on day one. - @SimCityAT

Rant mode on....

The bloke says a whole lotta stuff.  Like Whole Lotta Rosie but less coherent and not as entertaining.

His tariff thing would have to be the replacement of income tax.  But all that is inflationary as it will raise retail prices.  But some voters too thick to recognise that.  It will also increase national debt.

He said the other day, he'll declare a state of emergency over the undocumented migrants so he can deploy the military. I cannot see that working out for him as he'll find half the population pushing back.  So he's full of sh*t.  I don't know about the executions.

He's got some real maniacs lined up - from the former drug addict and anti-vaccine guy Kennedy Jr and alleged sexual predator Gaetz.  I don't think anyone has the stomach in their parliament to vote for their appointment to their posts. And Eric Trump or whoever should learn to keep their mouths shut.  Dad should be reigning them in.  Elon Musk is now a joke. Department of Government Efficiency? My eye.  Laughable.

Even though Donny seems like he's got everyone in his pocket, he and his proxies still have to work within the current laws. It's not clear they can even change them.  Not in 4 years anyway.  Executive orders only go so far.

Even the Supreme Court won't just roll over and let him tickle their tummies.   If they are so far gone they do then the US as a democracy is done for. Hail Caesar! Hail Trump!

As for Ukraine, again, like he knows anything about it.  If Putin says jump, he'll say how high.  Trump always says he'll do a deal but he's no great expert in diplomacy and you cannot make a deal with someone as untrustworthy as Putin.  But he's happy to sell them down the river. Loss of territory, even if agreed with Kyiv will just lead Putin to be involved in a low level guerrilla war of resistance.  The fighting will continue.  Russians are already becoming nervous by Putin's actions.  He had to bring in the DPRK troops because no-one would support large scale conscription.  Unbelievable Trump thinks he can do anything useful by leaving or hobbling NATO.  He'll lose his bases all over. Personally I think there will be war across Europe sooner than later.   

Sorry, rant over.

@fluffy2560

Anyone that has killed a police officer, will get the death penalty. I know a lot of it is all talk, he just knew what to say and trick people in voting for him. Farage is just acting the same.

@fluffy2560Anyone that has killed a police officer, will get the death penalty. I know a lot of it is all talk, he just knew what to say and trick people in voting for him. Farage is just acting the same. - @SimCityAT

I don't see he can enact that.  It'd have to be a federal officer like the FBI. DEA etc.  One of the cabinet proxies is intending to dismantle the FBI anyway.  The States will have something to say about the Federal government interfering in their justice system.

Farage is the honorable member of Trump's cabinet for somewhere in Essex, UK.  Apparently he's never in the constituency and does it all remotely.  He blamed security considerations from Parliament but the security office there denied he'd ever asked them about it.   I used to like Farage but he trod on issues I support so now he's persona non-grata.

I doubt it's even on their radar. This was on the cards for cancellation years ago. Unless it hits either of them in their pockets, they won't care one single bit. Both of them can currently do what they want so it has little relevance to them personally. In any case, one of Trump's loopy shoe-in candidates for cabinet positions wants to dismantle the IRS. Then it's definitely moot.
On the other hand, Trump will never be able to carry out a lot of his threats as it will take longer than he's in power and not everyone will roll over quite so easily. Challenges to some of his ideas are already being drafted ready for the courts should he try it on. That will take years to resolve. And not all Republicans agree with dismantling the state. It's definitely not clear cut.

Overall it seems mainly a lot of his policies seem to be voter directed hyperbole. Case of many turkeys voting for Christmas. - @fluffy2560

"Hungary and the US will need to sign an agreement to prevent double taxation, as the incumbent administration "has failed to renew the one that expired", Orban said, adding that he was seeking agreement with Trump "on some major economic matters". "I think we will have to opportunity to do so," he said."

[link under review]#

@rxcats

I reckon no-one in the current circumstances, no-one will do anything. Trump is still selecting his posse members for the important jobs.   The DTA (Double Tax Agreement) will be on the list but until 20 Jan 2025 and Trump has his hands on the levers of power, nothing will happen.  In the meantime, it will be business as usual.

Orban's got no power with Trump.  He's just another one of the useful idiots for both Trump and Putin.

More locally, it will be interesting to see what the EU is going to do with Hungary.  The HU role as rotating leader of the Council of Europe ends at the end of the year.  Hungary has been given the cold shoulder for 6 months. 

So maybe things will hot up with the next incumbent (Poland) as they are very much not friends with Putin and no longer friends with Hungary or the other Putin apologists like Slovakia's Fico.