Practicalities
Business as Usual (Changes in Hungary)
Coming up in this episode of Hungary’s online radio show (and podcast)… “Business as Usual (Changes in Hungary).”
In the second of a series of Budacast episodes, Uncle Drew once again speaks to Barbara Ürögdi of Helpers Hungary who tells us that doing business in Hungary is always about changes, but last year’s wave of new legislation could rock your boat.
These days in Hungary, one might feel like they’re lost in the woods given all of the legal changes, protests, and economic turmoil. Lately, Drew says it can almost be a bit overwhelming if one pays too much attention to news about Hungary.
Not to worry – Barbara has some more tips for those living and working in Hungary, to help them sift through the facts and fiction. Hopefully she addresses any concerns listeners might have about what’s been going on.
First, she speaks about the kinds of clients that Helpers has to later address some of their specific concerns.
She says the basic idea of Helpers is to provide core services: to provide business consultancy and project management; and relocation – basically for small business owners, foreigners who do work or business in Hungary.
“In this, we are quite unique on the Hungarian market,” she explains, “because the services we provide are only typically available for big businesses, through consulting companies and big relocation companies – things like financial consulting, business planning, market research, partner searches, legal and accounting advice and also practical project management.”
Barbara continues: “I think what’s important is that our core client base is made up of small- and medium-sized businesses that are owned and run by foreigners, and that’s a very niche market because they typically have to rely on consultants and the local experts to make sense of the regulations and to run their businesses, not only compliantly but also successfully. But because of the size of their business, they generally do not have the same concerns as corporations have.
“Big consulting companies and also the media and government communication tends to focus on the interests of big business, so most of the stuff that you will read in the media does not directly concern you if you’re running a small business but finding out what does and doesn’t concern you is tricky business,” she explains.
“Legislation tends to be written in Hungarian and is very very long and basically incomprehensible to anyone,” Ürögdi quips, “so you have to rely on experts. And you get some of your information from the media, but that’s pretty much your only source of information, especially if you’re a foreigner. So what we try to do is provide targeted assistance and information, specifically for small- and medium-sized businesses – that’s why we’re here having this conversation.”
Helpers Hungary has actually reacted in a very targeted way to the tidal wave of changes in Hungary in late 2011 and early 2012.
“Two things kind of coincided over the last few months,” she explains. “One of them was expected: we knew that both corporate legislation and the tax regime are going to change from 2012.”
She says that in terms of legislation, things always change in Hungary, so that was no surprise.
“Taxes change every few months; it’s very difficult to keep track, but not only that – it’s also very difficult to plan ahead, which is essential for business,” says Ürögdi in terms of doing business in Hungary. “So this is something we’ve been preparing for for a while.
“We knew that there was a proposal on the table which would be voted on just before Christmas, for example, which affected, more or less, every piece of law that has to do with owning, running or transferring a company. What we didn’t know is that there would also be a modification, which would be passed on December 30th. So then we basically spent the first week of January sifting through those modifications and trying to figure out what actually changed and what didn’t.”
According to Barbara, Helpers also knew that the tax regime was going to change.
“Most of that was public, but until something is actually set down in law, it can always change at the last minute in Hungary. So it’s been a few months of trying to figure out what’s going to happen and trying to prepare our clients for it.
“Interestingly, that has coincided with the whole political and economic turmoil that kind of happened in Hungary over the last few months – we did not plan for that. We also didn’t plan for the inflation that happened. So there’s a lot of stuff that we’ve had to do on the fly and keep in contact with both our partners and advisors to make sure that we are as thoroughly prepared as possible.
She says that at the moment there are two concrete steps that are being taken by Helpers.
“One is that we have prepared a document, which is very short – two pages – and it’s literally the most relevant bits and pieces from the new corporate law and the new tax law that are specifically interesting for small businesses.
“Just to give you an idea, the new corporate law is 300 pages and the modifications which were passed are another 300. It’s lots and lots of stuff, so nobody actually reads that. But our lawyer show specializes in assisting small businesses has provided us with 10-12 pieces of information that are directly relevant, so we’ve compiled this all in a document. It’s on our website and accessible to anyone for free, so it’s not just for our clients.”
As a follow up to that, Helpers Hungary has started a blog.
Barbara explains: “We’re going to have about 1-2 entries every week, detailing the new experiences that we have with the new legislation in Hungary, since a lot of it is currently just information but we don’t actually see how it’s going to work in practice.”
She said the blog will also include reflections on the economic and political situation in general.
Ürögdi gave one example of some information in the document compiled by Helpers.
“One of the things that affects our business directly is that the procedure for incorporating companies in Hungary has changed completely and is actually still in the process of changing. One of the services that we provide, which is pretty much at the core of our service offering is setting up companies and launching them – starting them in their operations, for foreigners.
“Until last year this was pretty much the simplest process in all of Europe, and one of the cheapest, because it was basically a ‘one-stop shop’, all filed electronically and basically in a day or two you’d end up with a company with a new VAT number and you’d be ready to go. You can open a bank account and trading the next day.”
She says now a new step has been introduced for registering companies in Hungary.
“The trade registry actually has to request a VAT number from the tax authority before actually registering the company, so technically if the tax authority does not approve of the owners or the CEOs it could reject the application and basically the trade registry would not be allowed to register the company.
“We informed our clients about this last year, because we knew that this was coming; what we didn’t know was how this was going to work out in practice. So far we have found that in the case of foreigners it’s actually quite simple, because what the authority looks for is previous tax liability, and if there isn’t any, for example in the case of a foreigner who’s never done business in Hungary, the issue of the tax number is basically automatic.”
According to her, this is one aspect that might actually disadvantage Hungarian business owners that have a long tax history in Hungary.
Barbara continues, “In the document we do outline the procedure, but we also include reflections on how this is going to affect clients’ businesses. In this case, for example, it might end up just being a formality for them – something that they should be aware of, because there is a hypothetical possibility that it could hinder the registration, but in the end it seems that in practical terms it’s not going to hurt them.
“So we’ve tried to keep it sort of practical, rather than translating the law we try to publish our experiences and kind of warn clients about realistic pitfalls and not burden them with too much legislation.
She points out that the Hungarian business environment gets a bad rap.
“It’s true that in some things it’s quite harsh. Most of the time that has to do with employment: taxes on employment including income taxes, social security, pension payments and all those are quite high. That is true, although I have to say that there are places where it’s higher and where it’s lower, but our corporate tax is one of the lowest – it’s on the same level as Cyprus, at 10%. Cyprus is well known as a tax haven. Hungarian dividend tax is at 16% which is also not so horrible.
“There are a lot of items in our tax system which are favorable and some which are not, but that’s kind of how it is to do business, you kind of make your way through the good and the bad.”
Of the Helpers document, she concludes: “In the end we kind of try to keep it realistic and focus on stuff that can actually help our clients get started and focus on their business rather than spending a lot of time working on legislation and worrying about tax laws.”
She says if one is well prepared and well informed, it’s possible to do good business in Hungary.
“I think a lot of the time people run into walls, because they don’t know what to expect in advance, and then they are shocked and surprised when their accountant tells them that they have to pay this or that thing, but technically that is something that you can plan for. And if you plan for it, if you have a solid business plan and financial plan, then you won’t have those kind of surprises.”
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0Alterations and Modifications (in Hungary)
In this episode of Budacast, Alterations and Modifications… We talk to entrepreneur Barbara Ürögdi of Helpers Hungary about what Hungary’s tidal wave of legal changes in 2012 means for expatriates, their businesses and life in Hungary.
If you’re even the slightest bit interested in what’s going on in Hungary, you’ve no doubt heard about all of the legal changes being enacted by the Hungarian Parliament and the subsequent international criticism.
Without getting into the politics, Budacast and Helpers Hungary’s Barbara Urogdi serve up some information and advice for those living and doing business here. Be sure to get this great summary (FREE download) compiled by Helpers:
Changes in Hungarian corporate law and related legislation (2012)
First of all, Barbara describes what’s been going on since last December in Hungary and says that numerous Helpers’ clients have been asking her what the changes mean for their lives and businesses.
“A lot of our clients have been contacting us with different questions and concerns,” she says, “because there’s a lot of stuff written about Hungary in the media these days, and while a lot of it is disturbing and true, a lot of it is quite sensationalist.
“I think people are having a bit of a hard time teasing apart the two and finding out not only what is true, because that’s almost like a philosophical question, but what exactly is relevant for them, for their lives, for their business.”
For example, Barbara says that some of Helpers’ clients are concerned about the status of Hungary in the EU, “because there has been news or rumors that Hungary might get kicked out of the Union, which I think is quite unrealistic. As far as [clients] are concerned, that would affect their lives very deeply, because they are currently resident for example in Hungary and can travel freely in the EU.”
She says that the other issue regarding the legal changes concerns businesses.
“There’s a lot of panic over the situation of the Hungarian banking system,” she explains. “Most people know that the currency has declined around 15% over the past few months, which is quite drastic, and people are reasonably concerned, both about the fate of the currency, about the security of their bank deposits, about their mortgages and just the general reputation of Hungary and the international markets.
“Most of our clients are foreigners and they do business internationally, so they are concerned that having a Hungarian business might not be such a good idea after a while if things go as they are going now.”
But are such changes more likely to hit locals harder than foreigners living in Hungary?
“The decline of the currency actually favors foreign investors and also exporters, so basically anyone who does their business in euros or dollars and ends up having expenditures in forints is currently very happy. Not all of those people are foreigners, but most foreigners are in that kind of situation, so a lot of our clients – whether they get a salary or income from business – actually draw their income in euros or dollars. So for those people, actually until inflation catches up with prices, it’s a good thing.”
Additionally, Ürögdi notes that real estate prices are currently very very low in Hungary.
“Add to that the inflation that’s happened over the last few months, and the fact that real estate prices haven’t even begun to catch up with the inflation. The fact is you can buy property for 10-15% less now than three months ago, which was already quite low.
“So if you have euros or dollars to spend, that can actually be an advantage to you.”
She addresses the recent rise in Hungary’s VAT rate.
“The issue that people often mention is that VAT’s very high in Hungary – it was already quite high last year at 25% – and now it’s been raised to 27%. That is one of the highest in the world, it’s true. But, once again, people who do business to business transactions with foreign companies, or do wholesaling outside of Hungary generally do not pay VAT anyway on those transactions, so many businesses are actually unaffected by this.”
Barbara says in general there’s a silver lining to such changes.
“There are a lot of people who see an opportunity in the situation rather than an obstacle.”
Not panicking in the current situation in Hungary is the key, according to her.
“Until recently, almost nothing appeared about Hungary in the international press, and in a way that was a good thing, because most of our clients try to get information from reliable sources, so they would speak to consultants like us, or speak to Hungarian friends, their lawyer, accountant, and that’s how they would make their decisions.
“But in recent months there’s actually been a lot of press about Hungary in English, and a lot of that does seem to induce panic. So when people are reading stuff like people are burning the EU flag in the streets, and if there were a referendum Hungary would definitely step out of the EU, of course they get concerned.”
She continues: “If you get all your information from the media, then you will be tempted into sensationalist thought, but if you actually speak to experts, which is what we have been trying to do over the past few months: trying to make sense of what’s going on, and also trying to find opportunities for our clients in the current situation, they will tell you that the chance of Hungary actually leaving the EU has not risen by much over the past few months; it’s just the exposure that has risen, but the chances are still very very slim that that will ever happen.
“There’s really not that much to panic about, and as I said, a lot of the recent changes can be viewed as opportunities, and in that case you should be happy.”
Stay tuned for our next episode with Barbara from Helpers Hungary as we help you sort facts from fiction in the rapidly changing Hungary.
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0Citizenshift (Acquiring Hungarian citizenship)
In this episode of Budacast, Uncle Drew files this special report on how to become a Hungarian, i.e. how to acquire Hungarian citizenship (if you’re eligible). Drew accompanied his wife Andrea and his mother in law to the district mayor’s office in Budapest’s 12th district for the swearing in ceremony.
In connection with officially becoming a Hungarian national, Andrea provides some tips for others who hope to become Hungarian.
Andrea smiles when Drew asks her if she’s excited to become a Hungarian citizen. She says the process took her about seven months (the Hungarian government has fast-tracked the process to swear in ethnic Hungarians living outside of Hungary’s borders, like those from Transylvania, like Andrea). Things weren’t so easy for her 13 years ago, when she tried to gain Hungarian citizenship when she first moved to Hungary. “They were not interested in me,” she jokes.
Drew says she’s interesting; that’s why he married her.
Andrea says the entire process of applying for Hungarian citizenship is no longer as complicated these days. She explains that she had to submit certain documents and prove relations between herself and her relative that was born in Hungary (her mom). In other cases, it could be someone’s grandparent as well.
In the Hungarian citizenship swearing in ceremony, a district government official makes some short remarks about becoming a Magyar, before the entire crowd repeats the citizenship oath and is officially handed their citizenship certificate.
At the end everyone makes a toast to the new Hungarian citizens, who receive flowers. Egészségedre!
After a bit of organization in the ceremonial hall, the Hungarian citizenship proceedings begin. Everyone stands to sing the Hungarian national anthem and then the participants take the oath, which contains the line: “I consider Hungary my home.”
When the ceremony is finished, everyone starts milling around and clinking glasses.
Outside, Drew realizes that his wife has officially become a Hungarian citizen, so he asks her how she feels.
“I’m so proud,” says Andrea, who offers a few tips for others seeking to redeem their Hungarian citizenship.
She says, “Don’t even start the procedure if you don’t speak the language, because you will need it through the entire process, starting with the application through to the very last step, when you take the vow. That’s the most important [tip].”
Andrea adds that becoming a Hungarian citizen take a heck of a lot of patience, because the process takes a lot of time (and effort).
To get started: gather all your documents, like birth certificates and supporting documentation to prove that one of your ancestors was Hungarian.
If you need help with your citizenship request, don’t hesitate to contact Andrea Szalczer-Leifheit, who heads Expatriate Services at Helpers Hungary. She can offer you more information on Hungarian citizenship requests and even guide you through the entire process.
Stay tuned!
Uncle Drew & Andrea
0
Ties That Bind (or not)
In this episode of Budacast, Hungary’s online radio show, “Ties That Bind,” we talk about the difference between how close families are Central Europe compared to in the US.
We also give you the scoop about how to get your residence established in Hungary (like Drew did) when you’re married to an EU citizen (Andrea), give a mention to what happens in Hungary on St. Stephen’s Day, 20 August, and recount how a Slovenian border guard didn’t want to let Drew out of the Schengen Zone (at 4am no less!).
Be sure to contact Andrea, head of Expatriate Services at Helpers Hungary, if you need help with sorting out your work visa, residence permit or any other official permit that you may need as a foreigner in Hungary.
Happy St. Stephen’s Day, August 20th. Drew says that while in the US the July 4th holiday feels like it’s the start of the summer, Hungary’s national holiday is always a signal that the summer is ending. Andrea says it’s because school is set to start on September 1st.
Perhaps you’re an international Erasmus (exchange) student, newly arrived to Budapest and you need some help sorting things out in Budapest? Again, Andrea might be able to help you with your residence permit or anything else.
And speaking of that, as he is now married to an EU citizen, Drew (an American) just received a 5-year residence card to stay in Hungary. If you’re like him, you know that renewing these is much more frequent for US citizens (and other non EU nationalities) than it is if you’re European.
Andrea and Drew talk about some of the steps necessary to get the so-called “tartózkodási kártya.” She says that, for an American, having an EU wife is the same as having a Hungarian wife (or husband). The residence card is much better than getting a Hungarian residence permit, which is like a visa sticker that is placed in your passport, because it’s good for 5 years. (Drew’s last permit was for less than one year.)
Now Drew is waiting for his address registration card (a “lakcím kártya”), which lists your address and basic information. It will be more permanent than the white cardboard thingy he has received so many times and never shown to anyone, and should arrive in the mail.
Ready for action
How was your summer vacation? We just got back from Tuscany, where our goal was to taste a lot of wine. Andrea says the landscape (taj) was beautiful. Drew says he was amazed at how expensive things were in Italy and is thankful for how affordable Hungary still is. They ended their trip in Venice, a beautiful place that can charge whatever the hell it wants.
Here’s a travel alert for those taking the overnight train from Venice to Budapest like we did: Beware of evil Slovenian border guards (at least one) who don’t want to let you out of the Schengen zone at 4 am! The guy couldn’t find the stamp in my passport when I had entered Schengen, so he didn’t want to let me out. It didn’t matter that I told him I was a resident in Hungary and showed him a paper from the immigration office that I was waiting for the renewal of my residence permit.
There was no reasoning with him, but eventually he stamped my passport out of exasperation. Was he looking for a bribe?
So what’s the difference between family relationships in Central Europe versus in America?
Andrea thinks family ties are not as strong in North America and recalls when she used to work on a cruise ship and one of the American guests kicked the bucket. She says that the family members accompanying him stayed on the cruise ship after he’d died.
Drew talks about the stereotype of Hungarians not being incredibly mobile, almost never moving far away from where their families are. He admits that he’s lived on both coasts in the US and that Americans just don’t feel distances in the same way.
While Andrea worked on cruise ships for about 8 years, she says that every 6 months she would spend one month back home to be around her family. She says she can’t imagine moving to a far away place like Australia, and especially as her parents are starting to get old.
Drew says that a long-time Budacast listener recently told him that she listens to the show to give herself a taste of what it’s like to live in Budapest, which she left when she was 8 years old. For him it is just shocking that any Hungarian could stay away for so long.
Budacast listeners, let us know what you think in the comments section of this site.
Our Word of the Week is tűzijáték, which is the Hungarian word for fireworks.
And, finally, I not only promise to stop talking about the weather (which has been absolutely sweltering in Budapest), but also will try not to introduce my wife with her super duper long last name.
Stay tuned!
Uncle Drew & Andrea
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0That time of the month (Hungarian landlord tips)
In this episode of Budacast, Hungary’s online, English language radio show, Uncle Drew and his wife Andrea attempt to give some tips on how to deal with landlords in Hungary.
House pets allowed?
Hungarian landlords can be a different breed, according to Drew, who says their behavior may be quite different than what you’re accustomed to back in your home country (or not). He recalls one of his first landlords in Hungary – a wonderful guy, but who would show up unannounced at the flat Drew was renting, and just barge in if he didn’t answer the door. It was a bit irritating, to put it lightly.
Another thing he says he’s experienced is that, many landlords in Hungary are eager to receive their rent money (that time of the month), but not so eager to spend anything on repairs or renovations to the flat. Before renting a flat in Budapest, you might want to make sure that the owner commits to making repairs in writing.
Andrea suggests that tenants make sure that their landlord see the flat repair in question, before just sending someone over to fix it.
When you’re ready to move out of your apartment, Drew says don’t sell yourself short when it comes to getting your kaucio money back (the deposit). Landlords may expect the flat to be in the exact same condition that it was when you first moved in, even concerning minor details like peeling paint, and are likely to try and deduct money from the deposit money you gave them when you moved in.
All foreigners living and working in Hungary are required to have a registered address (they receive a “registration card” from the authorities). Unfortunately, few landlords want to officially register their tenants at the address of their flat, because they are concerned that the Hungarian tax authorities will be aware of the rent they are receiving, which officially would be subject to taxation. For similar reasons, it’s also typical that most Hungarian landlords want you to pay the rent in cash – no bank transfers!
Of course there are exceptions to these phenomena, so choose your landlord wisely.
Andrea says that if you do like the flat but the landlord won’t let you officially register yourself there, you will likely need to find a friend who gives you permission to register at their apartment. This can be a bit of a problem, as you obviously will not be living there. Make sure your name is on the mailbox there.
She suggests that before renting a flat one should make sure that they have gone over all of the details of the rental contract with the landlord; clarify everything in advance. Also, make sure you show your rental contract to someone familiar with the law in Hungary who can read the fine print.
Typically, apartment owners in Hungary ask for two months’ rent up front as a deposit, as well as the first month’s rent.
In the final analysis, Andrea and Drew think that it’s almost as important to make sure you have a landlord you can live with, as it is to find a decent flat in Budapest. For more info on finding a flat in Hungary, check this out.
If you’re an expatriate in Hungary who needs HELP with these or any similar issues, be sure to contact Andrea Szalczer-Leifheit, who heads Expatriate Services at Helpers Hungary.
Budacast’s Word of the Week is “tulaj” which is the shortened version of tulajdonos, literally “owner” which is how Hungarians refer to their landlords.
Stay tuned!
Uncle Drew & Andrea
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0Beat the Heat (in Budapest)
At the risk of frustrating my wife, who’s bored with all of our talk about the weather in Hungary, it’s turning out to be one heck of a hot summer in Budapest. Temperatures have been at or near 40 degrees Celsius (which is around 100 degrees Fahrenheit) for several days now.
Coping mechanism
Considering I’m originally from the Midwest of the United States, not too far from Chicago, I almost amaze myself that I’m able to get by here without air conditioning – as do most Hungarians. The heat here in this part of the world is much less humid than what we suffer through back home.
With all that in mind, we’ve dug up an archival episode of Hungary’s online radio show and podcast in which our expert, Budapest resident Áron Mozes, gives us the scoop on how Hungarians beat the heat during the summer. Áron tells us about ‘strand’ culture – the Hungarian beach – as well as Budapest’s hot nightlife.
Aside from Budapest being a sweltering place in the summer, he says it’s filled with tourist sites, thermal baths and places to see, parks and fun nightlife. Áron says he spends a lot of the season biking around Budapest.
But what do other Hungarians do in summer. According to him, going to parks, going to the thermal baths, traveling on the Danube by boat, visiting festivals, or just lazing away on the banks of the Danube.
Áron suggests going to Margaret Island (Margit Sziget) to spend an entire hot summer day in Budapest, to watch people and beautiful women as well as getting a tan.
He says that a Hungarian “strand” is where the locals go to cool off. Out of Budapest’s 20 thermal baths, many of them are open air and great places to go during the summer. The Palatinus Strand on Margaret Island, he contends, is the most popular and has wave pools and slides for kids of all ages.
According to Áron, if you’re headed to the strand be sure to bring a bathing suit, sandals, a towel and suntan lotion. He says that a day at the Hungarian strand will set you back about Huf 5,000 (but don’t forget about inflation; our interview is from three summers ago!). In addition to your entry ticket, have a Hungarian langos (fried dough with cheese, sour cream, etc.) and a froccs (a wine spritzer) and you’ll fit in with the locals. For a quieter atmosphere, he recommends the Csillaghegyi Strand.
Finally, Áron raves about all of the wonderful open-air clubs in Budapest which are loaded with stunning women. He likes the cluster of clubs at Hajógyári Sziget.
Our Budacast Word of the Week is kánikula, which means heatwave in Hungarian.
Stay tuned!
Uncle Drew & Andrea
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2- You go to their "who we are" page and all there is is a block of text, no names, no faces. Yea or nay?
- Iced espresso out of our little scorched pot. Make that a double!
