Market Taxation Guide - Hungary
This Market Taxation Guide (Hungary) provides the following details:
- Reference information about all taxes applied at source, through Clearstream Banking1 and its local depositories, to securities deposited in Clearstream Banking; and
- Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.
New and improved tax information and procedures that become available will be included on an ongoing basis.
Important note:
This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.
Holding restriction
For dividends paid on non-listed shares, private individuals resident in Hungary must pay an additional 14% of Healthcare Contribution. As a consequence, it has been decided to restrict the holding of non-listed Hungarian equities in Clearstream Banking on behalf of final beneficial owners that are private individuals resident in Hungary.
Any customer not complying with this holding restriction agrees that it shall indemnify and hold harmless Clearstream Banking for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by Clearstream Banking arising out of or resulting from such non-compliance.
Withholding tax
- Standard tax rate on debt securities: 15%
Hungarian law does not currently recognise the nominee concept for interest payments made on debt securities. Clearstream Banking, as account holder, is recognized as being the registered owner of debt securities. As a result, interest payments made on Hungarian debt securities safekept for Clearstream will be exempt from withholding tax because legal entities are not subject to this tax.
No action is required by the customer to ensure that exemption at source is applied on interest payments. However, it remains the responsibility of the final investors to fulfil their tax declaration and payment obligations.
- Standard tax rate on equities: 15%
As of 1 January 2016, a 15% withholding tax applies to private investors and to undisclosed positions on dividends paid for stock exchange listed and non-listed equities. Before that date, the standard withholding tax rate on Hungarian equities was 16%.
Debt Securities | Holding restriction | Withholding tax rate | Relief at source | Quick refund | Standard refund | |||||
No | 15% | |||||||||
Clearstream customers | Yes a | N/A | N/A | |||||||
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a. Automatic exemption at source based on Clearstream Banking status.
Equities | Holding restriction | Withholding tax rate | Relief at source | Quick refund | Standard refund | |
| Yes a | 15%b | |||||
Individuals residents of Double Taxation Treaty (DTT) countries | Yes | No | Yes | |||
Legal entities not resident in Hungary | Yes | Yes c | Yes | |||
Legal entities resident in Hungary | Yes | Yes c | No | |||
Individuals resident in Hungary | No | No | No | |||
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a. Applicable to Hungarian individuals holding non-listed Hungarian equities.
b. Before January 2016, the standard withholding tax rate on Hungarian equities was 16%.
c. Quick refund available only if the issuer agrees to amend his declaration to the Hungarian Tax Authorities.
Capital Gains Tax
From 1 January 2016, the capital gains tax rate is 15%. Before this date, the capital gains tax rate was 16%.
Beneficial owners that are legal entities, whether resident or non-resident of Hungary, are exempt from capital gains tax.
Hungarian law does not currently recognise the nominee concept for capital gains. The entity in whose name the account is opened in Hungary is regarded, for Hungarian tax purposes, as the party subject to personal income tax. Consequently, interest payments made on Hungarian debt securities registered in the name of Clearstream Banking are exempt from capital gains tax (legal entities being eligible to full exemption). No action is required by the customer to ensure that this exemption is applied.
Note: It remains the responsibility of beneficial owners that are individual persons to comply, through their annual fiscal declaration, with all legal and regulatory requirements imposed by the legislation of their country of residence in respect of all domestic and foreign income received during the respective calendar year. Clearstream Banking has no direct or indirect liability towards the respective tax authorities, including those of Hungary, if this obligation is not respected by the individual beneficial owners.
Stamp Duty
There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
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1. “Clearstream Banking” refers collectively to Clearstream Banking S.A. and Clearstream Banking AG (for Clearstream Banking AG customers using Creation accounts)