Useful information about Freelancer 2023
Freelancing is becoming increasingly popular these days. In this article, we summarise some important facts about freelancing.
Freelancer report
The word freelancer means freelancer, which is used to describe an individual who does not work as an employee of a company, but undertakes a specific job or project on a contract basis. They invoice for the work they do, either as a sole trader or as a partner.
Freelancer work
Freelance jobs are often much more varied than an employee job. If you're a professional, you can contract on a project basis, on an hourly, daily or monthly basis, on flexible terms. You can do the work from home or from anywhere in the world at any time. You can be involved in just one project, but you can also work for other companies on a variety of different tasks. You can also work online. Many people become freelancers for this reason, for example. Typical freelance work includes programming, website editing, copywriting, graphics, but I've also met digital nomads in customer service. A freelancer can do a Facebook campaign, manage google Adwords ads or anything that can be done online. However, it is important to note that this type of activity is not limited to online business. You can also be a design engineer or a consultant. Technically, it just depends on the contractors.
Freelancer as a form of business
Until September 2022, KATA was one of the best freelancing solutions in Hungary. By paying a fixed tax of 25, 50 or 75 thousand HUF per month, we could earn up to 12M HUF per year. There was a lot of grumbling when this form of business was abolished, and I should note that it is not usual to change tax rules almost immediately during the year, but let's face it: many KATA entrepreneurs, when they crossed the border, bought out their new business in the name of their wife, sister, mum, dad or just a friend and continued working, even as a side job, paying the lower fixed tax. This was a great loophole that many people took advantage of. During 2022 and 2023, many people contacted us to help them find the right business form to continue their current business with the benefits of the former KATA tax. Of course, it depends on the volume of business, but if you are not employing other professionals but selling your own expertise, the best way to do this at the moment is to set up a freelance sole trader business in Dubai.
Benefits of freelancing in Dubai
Dubai is one of the world's most popular business centres and has many advantages for freelancers. Below are some of the benefits, but I will not be exhaustive:
- Tax systems and tax advantages: Dubai is famous for its low tax burden. There is no income tax in the Emirates, low Value Added Tax (VAT), which applies only to sales within the country, and no wealth or capital gains tax. Such tax advantages allow entrepreneurs to keep more revenue for themselves.
- Flexible business environment: Dubai has an easy-to-use business environment that allows entrepreneurs to set up their businesses quickly and easily. There are a number of professional service companies in the country to help start-ups set up and operate properly.
- No currency restrictions: There are no currency restrictions in Dubai that prevent you from transferring money abroad or receiving income from abroad in another currency. This allows entrepreneurs to easily manage their international transactions.
- Foreign ownership: many Dubai free trade zones and company forms offer foreign entrepreneurs the opportunity to 100% ownership in their own business. This gives entrepreneurs full control over their business.
- Access to business opportunities: Dubai has a highly developed infrastructure and located in a region where trade and business are booming. This allows freelancers to easily access different sectors and markets. In addition, the tax advantages make it easier to compete for the right job.
- Establishment possibility: You can obtain a business permanent resident permit in Dubai for 2 years, renewable.
- Stability and security: Dubai offers a very stable and secure environment for entrepreneurs, both politically and economically. This helps businesses to prosper in the long term.
- Cultural diversity: Dubai is a culturally diverse city, which allows you to build business relationships across different cultures and languages. This can help you communicate and collaborate more easily with international clients and partners. The population of Dubai of the order of 3,5M in 2023 and more than 85%-a foreign. Of different origins and religions, at peace with each other. Most of the population work for multinational companies and speak English. In addition, each year 14-15 million tourists also visits Dubai.
However, it is important to note that entrepreneurs should carefully assess the business environment in Dubai and ensure compliance with local laws and regulations. Business plan development, financial planning and the use of local advisors are also key to starting a successful business in Dubai. We are at your disposal for all of these.
Why waste your time on someone else's business when you could be building your own?
You can help countless businesses, building your own business from anywhere in the world. You can even manage a Facebook profile or organise online ads on Facebook or Google's advertising system. You can be a programmer or a specialist in any industry, you can build a long-term profitable business of your own with your expertise and image. An important advantage of being a freelancer is that the work can be done from home or from anywhere you like.
Freelancer taxation in Dubai
Dubai has been the centre of tax exemption in the world for the past decades.After the introduction of the general sales tax in 2018, the legal conditions for the introduction of the corporate tax were created in 2022, after which the new corporate tax was promulgated on 1 June 2023. The introduction of the tax is effective from the next fiscal year (recall the circumstances of the change in the KATA taxation), so corporate tax will be due from fiscal year 2024. But it is worth reading the rules on corporation tax, as the previous tax exemption may be preserved for a few more years.
By rule, everyone must register for corporate tax with the Federal Tax Authority (FTA). Corporation tax on profits 9% on profits above AED 375000. Below the tax-free threshold, and above the tax-free threshold, corporate tax is charged. However, it is important to note that until the end of 2026, for turnover below AED 3,000,000, 100% of the profit is tax exempt, which is, translated, almost Tax exemption up to HUF 300.000.000either as a freelancer or as a contractor. It's important to know that bookkeeping and filing returns are already compulsory, but this is also mandatory everywhere else. For further tax issues, see the relevant we write in our article.
Hungarian flat tax or Freelancer business in Dubai:
What to know about the flat tax rules for Hungarian sole proprietorships?
Up to HUF 18,000,000 in turnover, you can opt for the tax exemption (AAM), which means that we do not charge VAT on our sales and we cannot account for the VAT we pay.
Depending on the type of activity, there may be an eligible expense ratio of 40%, 80% or even 90%. This means that we can deduct this amount from the income and the remainder forms the basis for personal income tax, social security contributions and social contribution tax.
Personal income tax 15% for the amount above HUF 1.200.000.
Social security contribution of 18.5% of the income subject to personal income tax, but at least monthly on the current minimum wage.
Social contribution tax of 13% on income subject to income tax, but at least 112.5% per month of the guaranteed minimum wage.
With all the taxes to pay, many professionals now prefer the following option.
How is a freelancer in Dubai taxed if he/she is self-employed?
Below a turnover of approximately HUF 300.000.000 (AED 3.000.000), 100% of the income is tax exempt until the end of 2026.
Above HUF 300.000.000 the first HUF 37.500.000 is tax-free, the part above this is subject to 9% tax.
From 2027, profits from any business activity up to AED 37,500,000 (AED 375,000) are tax exempt, with the excess being subject to a 9% profits tax.
Freelancer platforms, or where to get work in your freelance career
If we decide we want to work as a freelancer, we have more options. For example, you can look for an employer who is happy for you to work on a contract basis to do a particular job. To do this, your company must also be able to handle remote working or provide online access to all the interfaces needed for the job.
There are platforms where companies are looking for freelancers to outsource certain parts of their business, or projects.
Most visited freelance job search and recruitment sites, tested and proven in 100%:
- upwork.com
- freelancer.com
- freelancer.hu
- fiverr.com
There are also countless other freelancer groups on Facebook, where you can search and join based on different topics.
Former KATA contractors
Many of those who have previously been able to work as freelancers who got away with a KATA business can take advantage of the freelancing opportunities in the UAE's free trade zones. If you want to find out if this is a good solution for you, contact us and we will help you as best we can.
