Tax optimisation in 2024
In common parlance, tax optimisation is virtually synonymous with tax evasion, tax avoidance or even money laundering. It is very important and worthwhile to distinguish between them.
Tax fraud, tax evasion, VAT fraud:
These are those economic activities whose sole purpose is to hide the tax due or to be taxed later. It is very important to note that these activities, which have an unauthorised tax base reduction effect or the sole purpose of the transaction is to avoid tax, reclaim or not pay VAT - thus causing significant damage to the budget - can easily fall into the category of fiscal fraud, which is severely penalised by law. Budget fraud was introduced into the former Penal Code with effect from 1 January 2012, with the amendment that on the revenue side tax evasion, excise fraud, smuggling and VAT fraud were merged, adding all fraud where the budget is damaged. On the other side, the cases of obtaining an undue economic advantage, damage to the financial interests of the European Communities and all cases of fraud against the budget are grouped together.
In particular, VAT, corporation tax, excise duty, employer's charges on declared jobs, local business tax are all potential targets for tax base reduction activities.
In practice, the extraction of business profits before tax is becoming increasingly difficult for entrepreneurs. Banks, money changers, lawyers, accountants... etc. have to investigate suspicious transactions which, if they occur, are subject to reporting obligations under the law. For example, in the case of a cash settlement of the purchase price of a real estate purchase contract, a withholding certificate must be submitted to the lawyer.
We avoid all forms of tax evasion and try to dissuade all entrepreneurs. With a well-designed tax optimisation structure, it is possible to reduce the tax burden on businesses through perfectly legal methods, even under international tax treaties. It is worth considering international tax optimisation options to ensure that the tax payable is at the most optimal level.
Penalty rates for tax fraud:
Budget fraud is punishable by imprisonment of between 1 and 10 years, depending on the value of the damage and the nature of the offence. Compensation for the damage caused is taken into account by the court as a mitigating circumstance.
Money laundering is defined as any activity that is designed to divert untaxed income to taxable income. Another branch of this is when income earned from illegal activity is diverted into a legal business, from where it becomes the property of a person in a legal and taxed form. Money laundering is prosecuted all over the world. For example, when assets sought after VAT fraud are laundered, several crimes are committed at once.
Tax optimisation - tax tricks
Tax optimisation is the most optimal legal way for businesses to legally reduce their tax liability by taking advantage of the legal opportunities provided by law to make the right tax deductions.
Tax planning is the set of activities within the legal framework of the tax system that aim to achieve or minimise the most favourable tax burden. Tax optimisation is the process whereby individuals or companies adopt tax strategies that allow them to legally reduce their tax burden, take advantage of tax benefits, exemptions or other tax advantages.
From tax optimisation during the taxpayers usually look for tax options that can reduce their tax liability. This may include tax exemptions, tax reductions, relocation of tax residence, tax avoidance strategies or the organisation of certain activities of the company in tax havens.
It is important to note that tax optimisation has a legitimate place in the tax system. The tax system often includes various tax benefits and exemptions that taxpayers can legitimately claim. Tax optimisation aims to take advantage of the opportunities offered by the tax system without relying on illegal tax avoidance or tax evasion.
However, it is important to understand that there is a line between tax optimisation and tax evasion. Tax evasion or tax fraud is an illegal activity that is severely punished by the authorities. Tax optimisation, on the other hand, is a legitimate and accepted practice, which means taking advantage of the tax opportunities that are legally available.
Tax optimisation is a widely used practice and is employed by many companies and individual taxpayers in order to minimise their tax liabilities and thus maintain or increase their income or profits. Because of the complexity and volatility of the tax system, tax experts and financial advisors can help you optimise your tax situation to achieve the best tax results.
Important facts about tax optimisation
If you only want to optimise taxes on paper, you are likely to commit fiscal fraud. If a business just accepts an invoice, even if it meets all the formal requirements, it is likely to break the law. In many cases, the company's own employees will also carry out what is reported by a third-party company. These are quickly filtered out by the NAV. It is important that it fits in with the company's activities, that the reporting company can be found, and that it has the right infrastructure to do the work. Another key to ideal tax planning is to ensure that the profits ultimately end up in the entrepreneur's account as a white, tax-free profit with the lowest tax liability.
10-20 years ago, many advisers were still advising clients to have 2 pockets, one with taxed legal money and the other with "okified", untaxed money. Nowadays, almost everything is transparent, so no responsible adviser will recommend such a thing.
The first step in building any structure is planning. Bad planning can easily get you into trouble. The central issue of effective tax planning today is where the ultimate beneficial owner, the entrepreneur, is located. tax details. How this country conventions on the avoidance of double taxation are. Is there a possibility or a need to transfer our tax residence to a country with a more favourable tax regime...?
One of the most effective tax planning locations: Dubai
Several articles on our website have been written about Starting a company in Dubai and the with permanent establishment about. Although corporation tax has been introduced for businesses in 2023, personal income and income from other investments are also exempt, so overall there is still plenty of room for competition in the United Arab Emirates tax system. If you are looking to expand to the Emirates or outsource certain parts of your business, contact us and we will find the most optimal solution.
Although there are countries with which Hungary does not have a double taxation convention, it still offers great opportunities. Such as Panama and Paraguay where it is relatively cheap and quick to obtain a permanent residence permit and where tax conditions are favourable. However, in these locations, you should be aware that in theory the Hungarian tax authorities may tax money earned in these countries at a minimum rate of 5%.