Hungary: Approval of new tax package

Around mid-July the Hungarian Parliament finally approved a bill, which technically “transfers several provisions on certain financial-related taxes (e.g. the special banking tax, the rules on the securities transaction tax and the financial transaction tax) to the relevant sector-specific laws as of 1 August 2023. In the last couple of years, during the Covid-era, new amendment to these regulations were governed by government decrees, which regulations now were incorporated into the wording of the relevant tax laws with the simultaneous aim of precising some aspects of the regulations. Now it is a good opportunity to provide a brief insight on current rules of financial transaction tax (FTT).

FTT has undergone significant revisions since it was introduced in 2012. The general rate of FTT now remains 0.3% of the base on certain payment services, with a cap of HUF 10,000 (app. EUR 25) per transaction. This tax now also applies to financial service providers with a seat or branch office outside Hungary, also having Hungarian resident clients. These new taxpayers are liable to register themselves at the Hungarian tax and customs authority as of the first day of the next month following the starting date of their tax liability. These taxpayers (with certain limited exceptions) are in general subject to the same regulations as taxpayers with a seat or branch in the territory of Hungary. Due to the expanded scope of taxpayers, a new definition has been introduced on “place of residence of the client”.

The regulations earlier also incorporated additional transactions: trade of securities is also subject to this law, with a rate of 0.3% of the transactional value of the securities, again, capped at HUF 10,000 per transaction.

Transactions performed by the Hungarian State Treasury (generally Hungarian government bonds, securities) as well as low-value transactions (up to HUF 20,000) of Hungarian private persons are exempted from the FTT. Similar exemption applies when non-Hungarian resident persons buy securities. Reporting this tax liability and filing obligation remains on a monthly basis.

Again, the most important point to consider from an international aspect is that non-Hungarian service providers or service providers with a branch office outside Hungary may also be subject to FTT payment and reporting in Hungary.

If you wish to discuss these topics, please contact:
WTS Klient Business Advisory Ltd.