Cash FTT update and interest income tax changes

UniCredit Bank Hungary Zrt.
Summary: 
The Hungarian Parliament approved yesterday additional fiscal adjustment measures submitted by the Minister of National Economy, Mr. Varga. In line with the law amendments besides the increase of the financial transaction tax (FTT), a one-off additional FTT payment is levied on domestic banks and 6% healthcare contribution is imposed on the interest income of private individuals.
Fri, 28/06/2013

Dear Tina,

Yesterday the Parliament approved the legislative proposal submitted by the Minister of National Economy that includes additional fiscal adjustment measures. The adopted version of the law amendment is not yet available publicly, so further analysis will be required on the subject. To the best of UniCredit Bank Hungary’s knowledge the fiscal adjustment measures will affect the below areas:

The general FTT rate on cash payments increases from 0.3% to 0.6% and the applicable cap of HUF 6,000 is abolished, while the FTT rate on transfers between accounts is raised to 0.3% from 0.2%, with the upper limit of HUF 6,000 still maintained. In addition to the increase of the FTT rate a one-off additional FTT payment is levied on Hungarian banks as compensation, as the year to date payment of FTT is below the budgeted level the government expected to collect. This payable extra amount is 208% of the FTT paid by each bank during the period of January – April 2013 and it shall be calculated and reported until 20 September 2013 and be paid in four equal amounts.

The increase of FTT shall be effective 1 August 2013 meaning that the value date of a subject transaction is 1 August 2013 or later. The bill on FTT currently applies to all institutions resident in Hungary or having branch offices in Hungary and that are engaged in payment services or money exchange, including but not limited to financial institutions.

In addition to the above, 6% healthcare contribution is going to be levied on interest income of resident and non-resident private persons except for proceeds deriving from government bonds issued in European Economic Area and denominated in Hungarian Forint as well as incomes from collective investment funds that invests at least 80% of their assets in the above government bonds.

UniCredit Bank Hungary Zrt. is engaged in continuous analysis in relation to the above changes, especially how they affect its clientele and will provide further details as soon as possible.

Related Newsflash: Newsflash Hungary - Hungary Increases Financial Transaction Tax

Impact on investors: Based on the latest available information clients of UniCredit Bank Hungary's Global Securities Services, being banks and other financial institutions, are not liable to the FTT in 2013 and to the best of our knowledge this fact is not affected by the above FTT amendments. The introduction of the healthcare contribution affects the non-resident and resident private individual investors.