Hungary: Securities Financial Transaction Tax (SFTT)
Introduction
The Hungarian Securities Financial Transaction Tax (SFTT) is a levy to be paid by investment service providers (or by cross-border investment service providers) effective since 1 August 2022, as defined in the Hungarian Investment Service Act (Act CXXXVIII, “Bszt.”) and in the Government Decree No 257/2022. VII. 18. The amended Hungarian SFTT Law effective since 1 August 2023 clarifies that SFTT only applies if the security account holder to whose account the purchased securities are credited is a tax resident in Hungary.
In July 2024, the Governmental Decree 183/2024 (VII.8.) amended the former Decree on Securities Financial Transaction Tax (SFTT), increasing the rate to be paid from 0.3% with a maximum HUF 10,000 per transaction to 0.45% with a maximum HUF 20,000 per transaction.
Impacted transactions and securities
Hungarian SFTT is triggered by the purchase of a financial instrument with an ISIN issued by KELER Zrt., the Hungarian central securities depository (CSD).
The SFTT is calculated based on the purchase price of the financial instrument credited to the security account. If financial instruments denominated in foreign currency (that is, non-HUF) have been purchased, the applied exchange rate is the rate published by the Hungarian National Bank as of the settlement date.
From a Hungarian SFTT perspective, the taxpayers are “investment service providers” (including cross-border investment service providers) that provide “investment services” leading to the purchase of an in-scope instrument.
The Hungarian Investment Service Act (Act CXXXVIII of 2007 on Investment Firms and Commodity Dealers, and on the Regulations Governing their Activities, “Bszt”) defines the relevant types of investment services and provides the definition of a financial instrument.
The approved amendments to the SFTT Law, effective 1 August 2023, clarify that security purchases executed by an investment service provider (or by a cross-border investment service provider, respectively) are subject to SFTT only in the following cases:
- The underlying securities have a Hungarian ISIN; and
- The transaction is executed on behalf of a security account holder (both natural and legal person) that is resident in Hungary for tax purposes.
Exemptions
In the following cases (non-exhaustive list), transactions in financial instruments are exempt from the Hungarian SFTT:
- The purchase is carried out for the benefit of private individuals and the purchase price is not more than HUF 20,000; or
- The security account holder (including both individual and legal persons) is not a tax resident in Hungary.
Tax rate
The rate of the SFTT is 0.45%, but it is capped at HUF 20,000 per purchase.
Submission and payment obligation
The SFTT is payable on a monthly basis. The tax declaration must be submitted until the 20th day of the month following the execution date of the purchase transaction and the tax liability must be rounded to the nearest thousand.
Registration requirements
If a cross-border investment service provider has become eligible to the SFTT after 31 August 2022, a tax registration form must be submitted by the first day of the following month.
Role of Clearstream Banking
Clearstream Banking, acting in its capacity as a global custodian providing general custody, safekeeping and income processing services for Hungarian securities, has no reporting and payment obligations with regard to the SFTT levied on security purchase transactions.
Furthermore, Clearstream Banking does not provide clients with service or assistance in relation to the Hungarian SFTT.
DisclaimerThis page is provided for information purposes only and does not aim to give any professional (legal, tax or otherwise) advice and should not be relied upon as such. Clearstream Banking strongly recommends that clients independently assess whether and how their business is impacted by the new security transaction levy in Hungary before taking any action based on or raising from the information included in this page and shall in no event be expected to any liability for the consequences arising, whether directly or indirectly, out of such actions. |