Hi!

I was thinking about putting some money on bank deposit for few months. The interest rate is not too great but better than nothing. Is the income from such deposits under taxation in Hungary? Is it deducted by bank or do I have take care of it myself?

Pepez - the mini-investor

Hi Pepez,

pepez wrote:

Is the income from such deposits under taxation in Hungary? Is it deducted by bank or do I have take care of it myself?

I don't think so, at least it never occured to me that I should pay any tax after it... Should I have?

Hope not.
alice

I assume it is. I know that in the UK the only way to keep any tax being deducted to the government is to open up special accounts (ISAs), but there are restrictions on how much you can invest into these each year.
Any money deposited in normal current accounts is subject to tax deductions.
Hungarian current accounts will also be subject to tax, but i am not sure if such tax free accounts exist here like in the UK. If they do they are normally only available to permanent residents and invlove alot of id proof.

I started to fill you my annual tax form. I use an electronic form,because it is know the tax rules better than me. it gives some clues.

natural (person) and legal entities paying taxes by different rules, and i will write about only person's type.

first page:
drawn taxes:
non independent job:
- salary
- spending money regarding to the job (phone bill, travel expenses, etc)
- salary for foreign work
- other salaries
- income from company (you own company)
- redundancy payment
independent job:
- independent job income (teaching, writing a book, similar things)
other incomes for working
- blablabla

Segregated taxes: as I see these are for just getting money without job:
- interest earnings, dividend, lending out flats


I think what we have to know is the last parts: interest earnings

I tried to make some search on the tax office website (and in google but what I found is related only to stocks. So I think you don't have to pay tax for a general bank account deposit. Other savings forms are subject to be taxed.
btw it is not worth to deposit huge money for long time in a general bank deposit.
higher the interest rate more subject to be taxed (yeah, clever idea, if I will have enough money to buy a country I will do that too)

Hungary has a progressive personal taxation system. This means that the higher the income, the higher the rate of tax payable.
In 2006, the income tax rate in Hungary for an individual is 18% - 36%.
Corporate tax in Hungary in 2006 is fixed at 16%.
Corporate tax for income up to HUF 5 million, about EUR 20,000 is 10%, subject to certain conditions.

Foreign nationals living and working in Hungary are required to register as a taxpayer here. Those who are permanently resident in Hungary are taxed on any income generated in Hungary or overseas, while foreign residents who are living and working on a temporary basis in Hungary are only taxed on their Hungarian income. Criteria used in defining permanent residence for taxation purposes include the usual family place of residence, property ownership and whether the taxpayer spends more than 183 days per year in Hungary.

Hungary signed Double Taxation Treaties with many other countries, which means that tax paid in one country can be offset against any tax payable in the other.

For more information check www.filolog.com/taxation

Greetings to you all,

Kris

Tax rules seem to have changed and now the rates are 9-10% on those special offers... it is pretty tempting now