Dear Clients, Dear Readers,

In view of the rising tax burden, it is worth examining the new rules and what it means for the businesses.

General rules

From 1 August 2024, the rates of duty have changed as follows:

• in general cases, the levy rate has increased to 0.45% (from 0.3%), but may not exceed HUF 20,000 per payment transaction (increased from HUF 10,000);
• for cash withdrawals, the fee has been increased to 0.9% (from 0.6%).

From 1 October 2024, an additional levy on transactions involving a conversion has been introduced, on top of the “basic” transaction levy:

• If a transaction involves a conversion (currency exchange transactions) between different currencies, it will be subject to a higher transaction levy.
• The additional levy rate – in addition to the standard transaction levy – is 0.45% per transaction and the HUF 20,000 limit also applies.

A closer look at the rules shows that the financial transaction tax will only increase by 50%, but the ceiling will double, so for example in the case of HUF 4.5 million transfer, the tax will double.

In addition, the tax burden will increase from 1 October, as the obligation to pay the levy will be extended to currency exchange transactions within one’s own account (i.e. transactions where someone exchanges HUF for euro or other currencies in the same account with the same payment service provider). This additional levy is in addition to the “basic” transaction levy for transactions involving conversion, so that the levy rate for conversion transactions is tripled (the “basic” levy is increased from 0.3% to 0.45% and a further 0.45% is added for conversion transactions).

All companies will be affected by the above changes, but especially those who carry out a significant number of banking financial transactions (e.g. companies with employees, subcontractors, companies that transfer many wages and salaries and other items, and companies that carry out a proportionately large number of international transfers and exchange transactions, i.e. import-export companies).

Let’s look at an example of how the financial transaction duty burden will change in the light of the new rules. Consider a company that has 100 million HUF outgoing transfers in a month (for ease of calculation), only two of which exceed 4.445 million HUF (this is where the HUF 20,000 limit comes into), and there are 100,000 EUR conversions in a month.

The above example shows the significant increase in the tax burden that the new rules will bring.

In connection with the above, it is important to underline that the legislation also sets the base and the ceiling of the financial transaction duty per payment transaction. In view of this, individual transfer orders of a group transfer are considered as separate payment transactions, so that the levy on group transfers has to be determined individually, and therefore, for example, for a transfer batch of HUF 20 million, each batch is looked at separately to see whether the ceiling is reached or not.

However, it is also worth bearing in mind that the so-called EFER transfer (Electronic Payment and Settlement System) offers the possibility of saving costs, given that the introduction of this service was precisely intended to allow for a smaller number of items (fewer payment orders) and thus lower bank charges for tax payments.

Under the EFER service:

• Fewer payment transactions and therefore lower bank charges.
• Payment of pre-defined taxes and/or duties can be made in one single transfer, regardless of whether the client requests payment to several NAV revenue accounts.
• The lower number of transactions also means savings on accounting fees.
• If the combined amount of the consolidated tax payments exceeds HUF 4.445 million, the transaction fee ceiling of HUF 20,000 will result in a cost reduction.

In the case of EFER transfers, therefore, unlike group transfers, the items do not have to be looked at individually, but consolidated, which can save a significant amount of financial transaction duty on an annual basis.

The financial transaction duty has also been extended to credit institutions and financial service providers that provide cross-border services in Hungary (such as Revolut and Wise) from 1 July 2022. Such services include payment services, lending and borrowing, currency exchange and currency exchange intermediation in Hungary. It may be worth examining and monitoring in the future whether these service providers are passing on the increased charges to businesses.

In the context of the increase and extension of the financial transaction duty, it is worthwhile to assess the costs for the business and to consider the possibilities to achieve tax savings and, if necessary, to seek expert advice. As part of our services, we can carry out the above calculation for your company and calculate the increase in your financial transaction tax burden.

Contact with a tax advisor

The above summary is for information and awareness-raising purposes. We recommend that you consult our experts before making any consequential decisions. For more information about our services, please visit our website: www.abt.hu