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Hungary

Crypto Tax Legislation & Law in Hungary

CMS Expert Guide on Taxation of Crypto-Assets

Table of contents
  1. 1. Is there a specific legislation issued for the taxation of crypto-assets or do general national tax law principles apply because the tax legislator has not regulated this so far?
  2. 2. How is the exchange of crypto-assets for a conventional FIAT currency (e.g. USD, EUR, GBP etc.) taxed?
  3. 3. Is taxation on the exchange of crypto-assets for goods/services or for other crypto-assets (e.g. BTC to ETH) the same as for conventional FIAT currency (e.g. USD, EUR, GBP etc.)?
  4. 4. When do transactions with crypto-assets performed by individuals start to qualify as a professional activity and what is the tax regime in such case?
  5. 5. Is it possible to offset losses made on: a) crypto-assets on gains of crypto-assets; b) other income from other activities with crypto-assets; c) another category?
  6. 6. What is the time frame to offset losses?
  7. 7. Are Non-Fungible Tokens (NFTs) treated the same way as crypto-assets? If not, please describe the differences.
  8. 8. How is mining taxed?
  9. 9. How is staking taxed? Are there differences in the taxation of the validator and the delegator?
  10. 10. Are there any other events/models for individuals earning income from activities with crypto-assets that might trigger tax (e.g. farming, futures, lending, liquidity pools, airdrops, hard forks, self-employment income, employment income, in crypto-assets funds etc.). If yes, how are these events/models taxed?
  11. 11. Are there any national tax law-specific monitoring, documentation and declaration requirements? If yes, what are the requirements?
  12. 12. Are there any other specialities regarding the taxation of crypto-assets (with the exception of VAT)?
Hungary
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1. Is there a specific legislation issued for the taxation of crypto-assets or do general national tax law principles apply because the tax legislator has not regulated this so far?

Yes, Hungary introduced special rules applicable to income generated from crypto-assets within the framework of personal income tax (PIT).

2. How is the exchange of crypto-assets for a conventional FIAT currency (e.g. USD, EUR, GBP etc.) taxed?

A special income category has been created for income from capital. Gains from crypto transactions are taxed at 15% PIT (the general tax rate in Hungary). No other tax or social security contribution is payable.

3. Is taxation on the exchange of crypto-assets for goods/services or for other crypto-assets (e.g. BTC to ETH) the same as for conventional FIAT currency (e.g. USD, EUR, GBP etc.)?

Exchange of crypto-assets for other crypto-assets is not taxable. Exchange of crypto-assets for goods/services is taxable in a similar way as their exchange to FIAT currency.

4. When do transactions with crypto-assets performed by individuals start to qualify as a professional activity and what is the tax regime in such case?

There is no difference in taxation between professional activity and casual traders.

5. Is it possible to offset losses made on: a) crypto-assets on gains of crypto-assets; b) other income from other activities with crypto-assets; c) another category?

It is possible to offset losses against gains on transactions with crypto-assets in the given tax year and in the subsequent 2 tax years.

6. What is the time frame to offset losses?

2 years.

7. Are Non-Fungible Tokens (NFTs) treated the same way as crypto-assets? If not, please describe the differences.

Yes.

8. How is mining taxed?

Mining is also taxed in the new legal framework, i.e. income is only taxable when crypto-currency is exchanged to a FIAT currency or other goods. Costs incurred with respect to mining constitute losses related to crypto-assets and can be offset against income in the given year and in the subsequent 2 tax years.

9. How is staking taxed? Are there differences in the taxation of the validator and the delegator?

Both validators and delegators are taxed in the same way as described previously, i.e. they are taxed only when they realise income in a FIAT currency by selling their crypto-asset. If the delegator receives income in a FIAT currency, that is taxed as income from crypto-assets rather than as interest income.

10. Are there any other events/models for individuals earning income from activities with crypto-assets that might trigger tax (e.g. farming, futures, lending, liquidity pools, airdrops, hard forks, self-employment income, employment income, in crypto-assets funds etc.). If yes, how are these events/models taxed?

If an individual earns crypto-assets for a specific activity, such as employment income or self-employment income e.g. airdrops, the income will be taxed against the normal rules applicable for such type of income, e.g. as employment income; and at the same time, the fair market value of the crypto-assets will be treated as loss from crypto activities.

11. Are there any national tax law-specific monitoring, documentation and declaration requirements? If yes, what are the requirements?

There are no specific requirements but individuals are required to keep appropriate records based on the general income tax rules.

12. Are there any other specialities regarding the taxation of crypto-assets (with the exception of VAT)?

No.