The news came as quite a blow to all three of us. While I had only recently begun teaching English in Budapest, my two roommates had been working with English schools such as International House and the British Council since arriving here some months ago. Now, with the closing of SELTI International, our future living and teaching in the city seemed bleaker than ever.
Freelancing as an English teacher in Budapest can become a complicated matter when dealing with Hungarian taxes; however, this is where SELTI, itself an English language-teaching school, comes in to save the day, providing a fairly straightforward business in which freelance teachers can avoid paying the exorbitant value-added tax (VAT) imposed by the government. Here’s how it works:
- Schedule an appointment with SELTI online, bringing with you on the day of your scheduled meeting a passport or other form of valid ID.
- Sign a document which affirms that you are a trainee employed by SELTI in New Zealand* (see form on the right).
- Agree that SELTI may take 19% of your earnings for each invoice they process and that this service be provided no more than two years.
- After the school at which you are employed has sent a document detailing the hours logged teaching, get paid.
*This part may or may not be legal, as indirectly stated by a former SELTI representative, considering you are not, in fact, in New Zealand.
Although that 19% may seem brutal – a fairly decent base pay for an English teacher is approximately 3,000 HUF, around $15, per hour – it’s less jarring when compared with the government’s cut of 26% VAT. Whether this is a truly legal process or not (SELTI and others assure that it is, but see asterisk above) is now no longer relevant for English teachers, as the government recently decided to freeze all SELTI accounts. With no complete reassurance to its staff of New Zealand trainees of being able to pay for this and the next months’ wages, SELTI, having no other option than to close down, sent out the following apologetic letter to its clients:
“I regret to inform you that due to the market downturn experienced in the language industry over the past year particularly, SELTI is no longer sustainable as a company and we are closing down. Fortunately we have settled payments owing to you to-date, but this obviously has implications for any further invoicing needed for October lessons. As the company winds down, we will be issuing cash invoices for October lessons (and any September invoices that remain unpaid). This means you will be able to collect cash directly from the language school for any lessons you taught, less the normal SELTI fees. It will mean you need to meet with someone at SELTI to collect the invoice and give it to the school upon receiving your payment.
We will explain more when it comes time for invoicing for the month, but we wanted to inform you now so if you need to make alternative arrangements from November onwards you can. As administrative staff are being let go during this time of transition, please contact firstname.lastname@example.org with any queries you have, and remaining staff will respond to your queries there.”
The news has undoubtedly soured a good number of people relying on SELTI to use the loopholes in the law to avoid the government VAT, but there remain other options: biting the bullet and going through the government directly being one, the other, becoming self-employed in the UK and performing the VATs through your own “business”. Given you don’t earn more than 12,000 pounds in the year, you are then exempt from paying the 25% UK VAT. This, of course, only applies to individuals within the European Union, leaving non-EU freelance teachers to find other routes or possibly piggyback off the self-employed EUers. All of which makes sense if you’re mad as a balloon or happen to be employed as a government tax accountant, if you’ll excuse the redundancy.
What prompted the government to finally crack down on this convoluted yet supposedly legal system? How will freelance English teachers working in such a volatile market for such low pay sustain themselves following the collapse of SELTI? Private lessons are an excellent way to pocket cash without having to report VAT (read: illegal), but just how feasible and sustainable this is remains questionable, particularly approaching the low season for English teaching in Budapest.
For now, our flat of English teachers will have to learn how to better our self-marketing skills or otherwise face a miserable winter of potato dinners and reading by candlelight.