Mihály Varga, Minister of Finance in Hungary, has announced in a video posted on his Facebook page that starting next year the country would lower income taxes on cryptocurrencies to 15%. As of now, taxes on income from cryptocurrency mining is at 30.5%, while taxes on capital gains for individuals are over 26.5%.
Tax cuts on crypto could “bring in billions” for Hungarian budget
In a speech regarding upcoming changes in the Hungarian taxation system, Mihály Varga said that “we [Hungary] is finally taking a step towards ‘whitening’ cryptocurrency incomes. As of now, tax rate on cryptocurrencies is at 30.5% which will be lowered to 15%.”
He also added that this change “could bring in billions of Hungarian Forints to the budget”. (1 US Dollar equals to around 295 Hungarian Forints at the time of publication.)
In Hungary under the current tax system, cryptocurrencies are not considered as money for tax purposes. For cryptocurrency traders, the income from trading activities falls under the category of “other income”. For miners, it counts as self-employed activities. Crypto taxes in Hungary only have to be paid when cryptocurrencies are exchanged into fiat money.
Other income means that crypto traders in Hungary must pay 15.5% as social contribution and 15% as personal income taxes. The former, however, is only subjected to 87% of the tax base. This means that in case of exchange gains the total tax rate comes to 26.535%.
The changes proposed in Varga’s video will soon be submitted to the Parliament and will be most likely accepted by the members. Most of the changes mentioned today could take effect as early as next July.
In his video, Mihály Varga has also announced a wide range of other tax cuts ranging from personal income tax to taxes on utility costs. All changes aim to “lower and simplify taxes” and to “help restart the economy after the pandemic”.