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Unlocking the Hungarian market: A must for foreign financial and credit institutions
According to the latest summer tax package, the range of service providers who fall under the scope of the financial transaction tax and are obliged to pay it, has been significantly expanded.
The old legislation regulated only those service providers, financial institutions, credit institutions and financial intermediaries who had a residency or a branch in Hungary.
The summer tax package extended the scope of the rules to foreign entities which are performing the above-listed activities in Hungary as cross-border services without any economic presence. The legislation should be applicable in the case of investment service providers as well, which have a residency or branch in Hungary, or which have a residency abroad, but provide cross-border services.
This means that many foreign service providers are required to register in Hungary from 1 August, in order to fulfill their declaration and tax payment obligations.
In a nutshell, the following provided services generates financial transaction tax obligation:
- Provision of payment services
- Provision of credit and money lending
- Currency exchange and currency exchange intermediation activities
- Provision of investment services (purchase of transferable stocks, money market instruments or stocks issued by a collective investment scheme issued by KELER Központi Értéktár Zrt. for customer’s or for own use too)
Obligations:
- Foreign service providers subject to financial transaction tax liability should register in Hungary by the first day of the month following the month in which their business activity has been started. Since the regulation already covered cross-border service providers from 1 July 2022 under the government decree during the emergency regime, in the case of certain service providers, retrospective registration is required. Failure to register can result in a fine of up to one million forints.
- The companies which are subject to the legislation should pay a financial transaction tax. The rate of financial transaction tax is 0.3 % of the financial transaction tax base, but the tax amount cannot exceed HUF 6,000 per payment transaction and HUF 10,000 per purchase the in case of investment services.
- The financial transaction tax should be assessed and paid monthly by the 20th day of the month from the performance date, and should be declared on the official declaration form (i.e. nr.’93 form). In the case of initiated payments, the payment service provider should assess, declare and pay the tax by the 20th day of the first month of the calendar year.
For more information, please contact:
Dr. Horváth Zoltán
Tax manager
VGD Hungary Kft.
E : vgd.budapest@vgd.hu
T : +36 (1) 225 7575
W : www.vgd.hu
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