Taxation of Stock Market Transactions in Hungary

In Hungary, 15% Personal Income Tax (PIT) is payable on net profits from stock market trading (such as buying and selling shares and ETFs), provided that the transactions qualify as Controlled Capital Market Transactions (CCMT)(Ellenőrzött Tőkepiaci Ügylet – ETÜ).

The good news is that capital gains from stock market trading are not subject to the 13% Social Contribution Tax (SZOCHO), meaning that the total tax burden remains at 15%.

Below, we explain the most important rules, deductible expenses, and available tax exemption options in detail.

What Qualifies as a Controlled Capital Market Transaction (CCMT)?

To benefit from the favorable 15% tax rate, your trades must qualify as CCMTs. This generally applies to transactions carried out through:

• An investment service provider (broker) operating in Hungary or in any EEA (European Economic Area) member state.
• A brokerage firm established in a country with which Hungary has a double taxation treaty, or in an OECD member state, such as the United States.

How Is the Taxable Amount Calculated?

Tax is not paid on each individual profitable sale. Instead, it is calculated based on your net profit for the entire tax year.

1. Loss Offset (Tax Equalization): You can deduct all documented stock market losses from your total trading gains for the year. For example, if you make HUF 500,000 on one stock but lose HUF 200,000 on another, you only pay 15% tax on the net gain of HUF 300,000.
2. Deductible Expenses: Fees paid to your broker that are directly related to your transactions can be deducted from your profits, such as purchase and sale commissions and account maintenance fees.
3. Foreign Exchange Rates: If you trade in a foreign currency, such as US dollars or euros, both profits and losses must be converted into Hungarian forints using the official exchange rate published by the Hungarian National Bank (MNB) applicable on the transaction settlement date.
4. Losses from Previous Years: You can offset losses from previous years against your current year’s stock market profits. This process is also known as tax equalization. Losses from the previous two tax years can be used for this purpose, provided they were declared to the tax authorities. If necessary, you can also declare them retroactively by filing a self-revision of your tax return.

Exception: Dividend Taxation Is Different!

If the shares or ETFs you hold pay dividends, the tax treatment differs from that of capital gains:

• 15% Personal Income Tax (PIT) applies to dividends.
• 13% Social Contribution Tax (SZOCHO) may also be payable on dividends, up to the point at which your total annual income subject to the relevant threshold reaches 22 times the minimum wage. Your salary is also included in this calculation.
• Note: Taxation of dividends from US stocks can be more complicated due to withholding taxes. Therefore, it may be worth considering ETFs that automatically reinvest and accumulate dividends (Accumulating ETFs).

How Can You Pay 0% Tax? (Tax Exemption Options)

You may be able to avoid the 15% tax by using specific types of investment accounts:

• Long-Term Investment Account (TBSZ): This is the most popular legal method. If you keep your money in the account for five years after the account opening year (the initial deposit year), realized stock market gains and dividends become fully tax-exempt (0% PIT). If you withdraw the money after three years, the tax rate is reduced to 10% instead of 15%.
• Retirement Savings Account (NYESZ): Stock market gains can also grow tax-free in this account, and you may claim a tax credit of 20% on contributions, up to HUF 100,000 per year. However, tax-free access to the funds is generally available only upon reaching retirement age and subject to the applicable conditions.

Tax Returns and Deadlines

Stock market profits must be reported in your annual personal income tax return, and any tax due must be paid to the Hungarian National Tax and Customs Administration (NAV) by May 20 each year.

• Hungarian brokerage firms (such as the investment divisions of Hungarian banks) provide detailed tax certificates at the beginning of the year. They often submit the relevant information to NAV automatically, so the data may already appear in your draft tax return.
• Foreign brokerage firms (such as Revolut, Trading 212, and the foreign entities of Interactive Brokers) generally require you to calculate and consolidate your transactions yourself and manually enter the relevant information in the appropriate sections of your tax return.

Crypto

It is important to note that, under Hungarian tax law, cryptocurrency transactions are not classified as Controlled Capital Market Transactions (CCMTs). They are subject to a separate tax category with its own tax rules.

Funded Accounts

So-called funded accounts refer to when we trade not with our own capital, but with a trading account provided by a proprietary trading firm (prop firm).

From a tax perspective, it does not qualify as a controlled capital market transaction (ETÜ), nor even as a crypto basket.

Trading on a funded account is considered a service provided by the trader, which is rewarded with potential payouts in the event of successful trading; meaning, the trader is paid for their services.

This service can be provided either as an individual (private person) or as a sole proprietor (EV). Although a sole proprietorship can result in up to 40% less tax, the base tax rates for income derived from trading on funded accounts are 15% personal income tax (SZJA) and 13% social contribution tax (SzocHo).