The Hungarian government is planning to lower most of the tax burdens as a means of restarting the economy after the devastating effects of the corona virus. Part of the planned changes in taxation includes lowering the tax on incomes after cryptocurrency related activities. The new laws have not yet been accepted by Parliament, based on the current goals of the government however we can expect a welcome change in the taxation of crypto assets. We have summarized the most important expected changes below.
As of today, no crypto-specific tax regulations have been introduced in Hungary yet. Any income from crypto assets had to be declared as other income, and the rather high tax rate of 30,5 percent had to be paid. The high tax rate led many traders and miners to avoid paying the tax entirely. The government expects the lower tax rate to urge more people to pay their taxes after their crypto assets.
We have summarized the most important aspects of the planned amendments:
§ Cryptocurrencies are to be defined in the new Hungarian laws: Cryptocurrency is a digital representation of value or rights, which can be stored or transferred by electronic means using double ledger accounting – or similar – technologies.
§ Costs relating to the revenues from trading or mining cryptocurrencies may be deducted from such revenue, and the remaining profits shall be subject to the 15 percent income tax. Income will have to be declared upon realizing the profits from the crypto assets – that is when the taxpayer exchanges the cryptocurrency to actual currencies.
When will I have to declare and pay the tax?
The first deadline for declaring the incomes and paying their associated taxes is planned to end in May 2023 for all Hungarian tax residences. Taxes shall be self-declared, which however may be inspected by the Hungarian National Tax Authority at any time. The burden of proving the accuracy of the tax declaration shall be borne by the taxpayer.
What if I have failed to pay tax after my crypto assets?
Taxpayers shall receive an amnesty for five years retrospectively in case they failed to declare and pay their taxes after crypto assets, therefore anyone will be able to lawfully declare and pay their taxes until May 2023 – according to the planned amendments.
With the assistance of our experts and partners, our Office provides professional legal services and expertise in all crypto-related activities – including exchanges, mining, daytrade, pooling etc. – and we may also help in other business related activities – such as founding of companies in Hungary and abroad, accounting, book-keeping etc.