Crypto Exchanges& Regulation in Hungary

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4 min read
Top exchanges in Hungary by Coincub criteria
Article review author
Jonathan Lea
Hungary head image

Crypto Country Rating: 7/10

8/10
Institutional acceptance
Increasing acceptance across sector
8/10
Exchanges & Wallets availability
All leading names with high presence and access
9/10
Government regulation
Light, with tax reductions in prospect for near future
6/10
Defi acceptance
Government looking to adopt some of its advantages
5/10
Financial services
Leading institutions unconsolidated
7/10
Transparency
Personal data collection, government tracking
9/10
Spending crypto
Well-established outlets and services
4/10
Banks activity in crypto
Leading banks still lagging

Bitcoin and cryptocurrency trading in Hungary

Hungary has plenty of crypto owners relative to its population size, and there is a keenness for crypto spending and investing. The government is planning tax reductions to increase compliance with tax policy. 

Law and crypto trading in Hungary

Legal - existing crypto legislation

Cryptocurrency, for a long time seen as risky by the Hungarian government, has now become much more acceptable. Measures to streamline the tax system, including tax cuts on crypto trading, are expected to increase tax revenues overall. You could say it’s become a very attractive place to deal in crypto. 

Legal - forthcoming crypto legislation

Possible tax reduction measures on crypto purchasing and gains are still in the proposal stage and if approved by the Hungarian parliament will take effect in 2022 – so watch this space.

Taxing cryptocurrencies in Hungary

Income Tax

Tax is a subject never far away from bitcoin and other digital currencies. Put simply, any crypto that you purchase as an investment is treated as income, and the gains and losses you realize on it are either income taxable or deductible. All cryptocurrency transactions are taxed under the Hungarian capital gains tax code, which contains a 15% capital gains tax and 19.5% health contribution (EHO) that has no absolute roof. This means that you will always have to pay independent of your original EHO contribution in Hungary from other sources. 

Tax relief

At present, you’ll pay 30.5% tax on profits made from cryptocurrency transactions, but the government may reduce this tax rate to minimize possible tax evasion and promote more crypto trading and investment. 

Tax when moving residency

If you are a long-term resident of Hungary you are probably deemed a permanent resident for tax purposes. If you are not a permanent resident, and your holdings are outside of Hungary you’ll fall under the required tax laws of your adopted country.

Tax on mining

Hungary is currently undergoing a review of its tax policy on crypto.  The tax on mining may change after this long-term review, with the prospect of a 50% reduction. At present, mining for coins is taxable and costs incurred during the process are tax deductible.

Crypto financial services in Hungary

Fin services - retirement planning

Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.

Fin services - banking

Crypto and digital currencies are openly debated and widely understood right from the top down. Like most countries, there is no bank or financial organization that would consider cryptocurrencies as regular currency, but Hungary is looking into the advantages of blockchain technology overall.

Fin Services - DeFi

Hungary’s banking and insurance sector recognises how FinTech businesses can attract a significant number of customers, and have started developing innovative solutions as well as forming various types of partnerships with companies in this field.

Using crypto in Hungary

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Spend

Hungary is possibly overlooked as a crypto leader, and spending all that crypto is a lot easier than you might think. Bitcoin ATMs are springing up all over the country and you can exchange your bitcoin for fiat or spend them directly in a wide number of places including hotels, jewellers, bars and cafes – you can even get some taxis to take you for a ride.  

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Gifting crypto

If you’re feeling generous you can gift your crypto but you’ll still have to pay tax on any gains you have made prior to gifting them, whether you’re giving them to a friend, relative or an officially recognized body with charitable status.

Crypto regulation in Hungary

Security

Cryptocurrencies in Hungary are not heavily regulated as yet, and there is no regulated market environment or designated authority to control the taxation of income from them. As always, it pays to do some research into exchanges and find out how much support and protection they offer. In all cases you need to have a clear record of your dealings. Overseas exchanges may provide a wider choice of services and currencies to choose from. Home-based securities may be able to provide more customer support – but you need to check. 

Transparency

As with many government bodies, Hungary needs to know about all your crypto dealing for tax purposes. The authorities can request information from crypto exchanges and get it. You’ll also have to disclose ID and details when opening an account with any exchange. Make sure you keep records of your dealing as either a casual or professional dealer.

Helpful?
FAQ

New to crypto? Here’s our guide!

FAQ Image #1 01 Why Bitcoin? It seems like the buzz around Bitcoin just keeps growing. Bitcoin is a constantly evolving technology with a passionate community. What is it about the digital asset that makes it such a controversial topic and attractive investment?
FAQ Image #2 02 How to Get Started with Bitcoin It can be difficult to get past the technical jargon surrounding bitcoin (BTC) and other cryptocurrencies in order to figure out how you can buy and store them. Beginners can purchase Bitcoin, for example, on many exchanges using fiat currency like U.S. Dollar, Euro or British Pound.
FAQ Image #3 03 Blockchains 101 Blockchains are a type of database where data is stored in blocks that are chained together. As new data comes in, it is entered into a block, which is then chained to the previous block. The Bitcoin blockchain serves as a ledger that records every Bitcoin transaction in history.
FAQ Image #4 04 Bitcoin in the Real World Ok - you’ve found an exchange, bought your Bitcoin, and stored it safely. What’s next? By now you can buy just about anything with Bitcoin if you try hard enough, from Amazon gift cards to an old master painting. You can also convert your BTC to fiat with ATMs, an exchange, and more.