Have you sold and bought cryptocurrency? These are worth paying attention to

For a long time, the legislator did not know what to do with this rapidly developing phenomenon, however, as of January 2022, the related tax issues were clarified. Cryptocurrencies (e.g., bitcoin, ethereum) based on a complicated blockchain system do not seem very friendly at first look, but the usability of the system has amazing possibilities, so it is worth dealing with it.

First of all, it is important to see that cryptocurrency is not an official means of payment, because its issuer is not a central organization. It is a different matter whether people manage and use it in this way. Everyone has heard the story of El Salvador, the country, which made bitcoin legal means of payment, but you can even buy a Tesla for bitcoin.

According to the Hungarian Tax Authority, “bitcoin (as a cryptocurrency) embodies a payment promise that can only be shown as a claim in case of purchase, it has no interest, but if it is exchanged for money (or used), it will have a yield, which can be profit or loss.” This definition contains many valuable concepts and questions for us.

How has cryptocurrency been taxed so far?

Neglecting the tax rates for now, the more important idea is that until the new regulation:

• the incomes that were derived from cryptocurrency mining: were classified as income from the independent activity of private individuals and were taxed accordingly,
• the profit that came from the sale and purchase, even though: it belonged to the category of other income and had to be taxed according to its rules.

How is cryptocurrency taxed after that?

After the profit, individuals will have to pay a personal income tax of 15% (which is significantly lower compared to the previous tax rates) when the crypto asset is taken out of the virtual space. This means that you have to pay a 15% tax on it if it was converted to traditional money, or if it was converted to any other value, namely, we used it to pay for a delicious dinner.

Can tax benefits be claimed?

They cannot be enforced, and the favourable rules can only be applied in the case of transactions available to anyone, not in the case of private transactions.

In summary, individuals only have to pay tax on crypto-assets if they are exchanged for real assets, such as legal tender, or if they are used to purchase movable property or real estate.

What is not subject to tax?

For example, no tax is required if the income from the transaction is no more than 10% of the minimum wage, i.e., HUF 20,000. But there is no need to pay tax even if the sum of these incomes in the tax year does not exceed the minimum wage, i.e., HUF 200,000.

Tax equalization can be applied if the total transaction losses in the tax year exceed the sum of the total transaction profits.

Resources:

https://nav.gov.hu/ado/szja/uj-szabalyok-alapjan-adoznak-a-kriptovaluta-ugyletek

https://nav.gov.hu/ado/szja/a-kriptougyletek-jovedelmenek-adozasa