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Hungary Extends the Scope of Transaction Tax

Hungary Extends the Scope of Transaction Tax

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As of 1 July 2022, Hungary's already existing financial transaction tax has been extended to payment service provision, credit and loan provision, currency exchange and mediated currency exchange services provided on a cross-border basis in Hungary. Provision of cross-border services means financial services provided in a country other than the country where the seat, place of business, head office, or branch of the service provider is located. Basically, this means that non-Hungarian service providers providing such services to Hungarian customers will most probably be affected by this extension.

The rate of the financial transaction tax for such cross-border service provision is 0.3 % but capped at HUF 10,000 (EUR 25) of the transaction value per transaction. The tax does not apply, among others, if/in the case of:

  • intrabank transfers if the owner of the sender and recipient accounts are the same person;
  • transfers between payment accounts and securities accounts if the owner of both accounts are the same person and the account holding entities belong to the same group;
  • the transaction serves clearing;
  • the transfers serve group financing and the there is only one account holding bank (e.g. cash pooling); and
  • the account holding bank performs the transfer for another payment service provider, financial enterprise, investment firm, investment fund or investment fund manager.

The amendment of the tax regulation requires cross-border service providers to register themselves with the Hungarian tax authority by 1 September 2022 in case they are liable to pay financial transaction tax as of 1 July 2022.  If they are liable to pay financial transaction tax after 1 July 2022, they are obliged to register with the Hungarian Tax Authority by the 1st day of the month following the day when tax liability has arisen. It causes uncertainty that the law does not specify any further step for cross-border service providers; thus, it is difficult to foresee how the tax will be imposed.  Also, it is not entirely clear what the consequences of failing to register will be or how the tax authority will discover such non-compliance. It is also to be examined whether with careful structuring of their service provision, the cross-border service providers can evade this tax.

By Gergely Szaloki, Local Partner, Schoenherr

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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