Tax question please help if you can! :)

You do not get to pick and choose where you will be taxed or how. That is already described and decided for you by the UK/Hungarian tax treaty. Copy here:

https://www.gov.uk/government/uploads/s … ungary.pdf

Short answer is, if you declare Residency in Hungary, you become a Hungarian tax resident and Hungary has the rights to tax your world wide income. Just because you have a sole trader business in the UK does not prevent Hungary from taxing that business income. If Hungary will tax it or not will depend on the conditions of your business and income as found in the tax treaty.

For example, if you declare residency in Hungary, by Article 4 of the tax treaty, Hungary might be able to tax that income. And if you administer this business while in Hungary, then you might have (by Article 7) "a place of management" for that business in Hungary, which strengthens Hungary's claim to tax that income.

I am not a tax attorney, nor am I an accountant. But I have consulted with such, as well as with the relevant tax authorities. And it often is a case by case issue. Although being a sole trader is the worst possible business form to expect to gain any sort of tax treaty relief -- you are better starting a formal business structure which provides more ways to save on taxes in any country.

I recommend starting with taking a copy of the UK/Hungarian tax treaty to a local UK tax office and asking what is their position on taxing you at their end in the UK. I expect it is there you might get the best free advice (for example -- can you be a UK registered sole trader while claiming residency abroad, and if so how would they tax your work if at all?). Then in Hungary you may need to talk to a tax expert (attorney or accountant) to find out what foreign income you have to report as income, if any, and if it might affect your basis for other taxes (such as health taxes).

Hi,

I would recommend you to contact with an expert, I know an accountant in London, called Adrienn Borbáth, she knows the Hungarian rules, and also the rules in UK, you can contact: http://abacusagent.co.uk/kapcsolat/

Hope this help!!

Kind Regards,

Zoltán

The way I understood it was that there's a double taxation treaty between the UK and Hungary. This means you (only) pay tax in the jurisdiction where you spend more than half your year - and this is tax on all income whether earnt in the UK or Hungary.
Seems the easiest method would be to stay more than half the year in the UK, then you can keep your tax affairs going to HMRC.
If this is not possible then it is going to get a bit complicated and maybe worth finding a Hungarian accountant who can ensure you're compliant.
With the UK leaving the EU you may want to consider being an official Hungarian resident sooner rather than later - in case restrictions are placed on Brits who moved to Hungary after a certain date.