HUNGARY | New Tax Amnesty
We inform our Clients that the Parliament adopted a new bill on 24 June 2013 with the aim of reducing the currently outstanding State debt. The bill provides for the introduction of the Stability Saving Account (hereinafter: “Stability account”), inter alia.
As of the announcement of the law modification, private individuals willing to pay at least 5 million Hungarian Forints will be entitled to a stability saving securities account and a stability saving bank account as a part of a bank account kept at a credit institution performing investment activity.
Any kind of income (even non-taxed) can be placed on these accounts keeping anonymity as well. Payments can be performed to an account only once: at the time of opening the account. However, the number of accounts opened by a private individual and the amount of the payment made is not limited.
Interest cannot be paid on the outstanding balance of the account, and the owner of the account can engage the account keeper to perform only transactions concerning State securities issued in Hungary or another EEA country which are denominated in Hungarian Forint.
The main benefits of the Stability account are the following: Based on the established and impregnable legal presumption, during a future tax authority audit the amount paid on the account should be considered as an income received at the time of performing the payment. Furthermore, the credit institution provides the tax authority with information regarding the payments made to and from the account, as well as the amount of the tax deducted in relation to these payments without providing the name of the account holder.
The income accounted for on the Stability account (the income deriving from security yields and the gain of transactions performed with respect to these securities) should be taxable at the tax rate concerning the interest income and effective on the first day of the tax year (currently 16 per cent). Nevertheless if the time elapsed between the formation of tax payment liability and the payment on the Stability Account is:
- less than 3 years, the tax base is 200% of the paid amount;
- at least 3 years but less than 4 years, the tax base is 100% of the paid amount;
- at least 4 years but less than 5 years, the tax base is 50% of the paid amount;
- at least 5 years, than no tax payment liability should arise. Therefore, the private individual can realize a non-taxable income after 5 years