4

Maybe the wrong page to ask, please redirect if so.

Currently I'm living in a country inside the Schengen area (Hungary, to be more specific), but I'm planning to move to Norway (also in Schengen, info may be related to work permit). However I'd prefer to find a remote job as a software developer that can be done from anywhere. I plan to operate as an entrepreneur registered in Norway so I would pay all my taxes there, but I would actually work from any possible area of the world. What do I need to report at Norwegian authorities and how will I be able to fulfill my taxing obligations?

  • 1
    Schengen is about freedom of movement, unrelated to working permit. – vartec May 26 '14 at 16:00
5

You're assuming that the place of your tax "registration" defines where you're going to be paying taxes. This assumption is incorrect.

Most, if not all, countries tax income derived while you're on their soil, with very specific exceptions (usually defined through tax treaties).

In addition, the country of your citizenship can always decide how and when to tax your income. I'm only aware of the US to be taxing worldwide income of their citizens, but you should check your own country's laws on that.

Also, the country where you're "registered" (Norway, for that matter) may have its own rules on how and what to tax. You may end up paying double taxes on the same income. Maybe even triple. Multiple tax treaties might be involved if you're moving around a lot. Norway tax treaties may not apply to you as you're not a Norwegian citizen. Hungarian tax treaties may not apply to you because you registered in Norway. That may become very tricky very quickly.

3

Let's look at your situation (living and working from Hungary for a Norwegian company -- either your own consulting business or directly on the payroll of your clients). I agree with littleadv 's answer: you're most probably to be taxable in Hungary.

There is an income tax treaty between Norway and Hungary, see this link: http://www.regjeringen.no/upload/kilde/fin/red/2001/0074/ddd/pdfv/128744-ungarn_2.pdf

The treaty seeks to eliminate double tax. Generally speaking such a treaty works as follows:

  • employer withholds taxes on gross income in country of origin (Norway), according to local legal obligation and applicable tax rates.

  • employee is taxable in country of residence (Hungary), according to laws and rates in that country.

  • employee deducts the taxes which have been paid in the country of origin from the taxes payable in the country of residence.

The net result is that you're not paying double taxes (orgigin + residence country tax). But in many cases you are still paying MAX(origin, residence) as a tax rate. If Norway taxes are higher, you probably do not need to pay additional taxes in Hungary, but you have paid the higher Norwegian tax. The other way, if Hungary taxes are higher, you'd still get a bill for the difference.

  • I don't think the OP wants to remain a resident of Hungary. – Gala May 27 '14 at 13:37
  • Good point. My answer is based on OP living in Hungary, or any country with a similar Norwegian tax treaty. Details may vary based on the applicable tax treaty. When leaving Hungary for a country that has no tax treaty, the double taxation of Norwegian income is likely to become an issue. – Freek Wiekmeijer May 27 '14 at 13:41
  • I think the OP intends to not be a resident of neither Hungary nor Norway. The treaty between Norway and Hungary affects citizens of one residing in the other. This is not the scenario in the question. – littleadv May 28 '14 at 4:20
  • MAX(origin, residence) will always flip the scales towards Norway as taxes are a bit higher there, so I don't think that would cause me any problems. Looks like I'll need to create a Norway based company and employ myself, thus ensure myself the location of taxation. This way I can afford myself to work from practically anywhere (as long as tourist visas allow me to stay in each country). – Cotro Gunn May 28 '14 at 7:31
  • That strategy might add up to illegal tax evasion when residing in a country that puts a tax on worldwide income. – Freek Wiekmeijer May 28 '14 at 10:28
-4

You are not going to be taxed anywhere, as long as you do not stay in one country for more than 3 months and you do not receive a salary. If you do not take up permanent residency anywhere, and you do not receive a salary, you are not liable to pay taxes. If on the other hand you are paid a salary for your work, you will have to pay income tax on that salary even if you stay less than 3 months in one country.

  • 1
    Where does the 3 months threshold come from? If you really have no income and move around a lot, your answer might be correct in practice but the threshold is arbitrary, tax law is not neatly organised like that, you have to contend with various conflicting tests for residence, treaties, etc. And even thought it's somewhat rare, it's perfectly possible to receive a salary that is not taxed locally (usually because it's taxed elsewhere and a tax treaty protects you from double taxation, e.g. for cross-border workers, posted workers, temporary work) – Relaxed Sep 16 '15 at 6:57
  • Er, even when I was in the US for 2.5 months, I had to pay tax. I had one month in a financial tax year in Australia, still had to pay tax. I don't live in NZ, but have income there, so have to pay tax. I don't think this logic quite works everywhere... – Mark Mayo Sep 17 '15 at 0:19

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.