Banking, Money and Taxes in Hungary
Although Hungary has been a member of the EU since 2004, the official currency is still the Hungarian Forint (HUF) rather than the Euro. Historically the forint was divided into 100 fillérs, but fillérs are not in circulation anymore and today they are merely used as a quantity in accounting. Bank notes range from 500 to 20 000 forint and the coins range start at five forint and go up to 200 forint.The general rate of inflation in the country is around 3%, which is slightly higher than other EU states, but this seems to be in preparation for when Hungary will eventually make the changeover to the Euro, the earliest date this could happen is 1st January 2014.
Banking in Hungary is relatively simple and up to the standards that expats from other western countries have become accustomed to. Internet banking comes standard with most bank accounts and there are a number of foreign-owned banks with offices in Hungary. When opening a bank account expats will be asked whether they would like to open a Forint account, Euro or US Dollar account, each account has its pros and cons and varying fee structures and minimum deposit requirements are usually the equivalent of US$100.
Expats opening a bank account in Hungary will need two forms of identification, usually a passport and a driver’s license. Proof of address is sometimes required and a letter from your employing company is also considerably helpful, but not essential. Most accounts are interest bearing but it is best to check the fine print. Expats wishing to have a debit card will need to make an initial deposit of about US$250, and sometime more. While credit cards are available, it is notoriously difficult for a foreigner to obtain one from a Hungarian bank. Expats generally tend to use credit cards from their home country or an international bank rather than ones from Hungarian banks.
Banking hours are from 9am until 5pm from Monday to Thursday, on Fridays banks tend to close early, usually 3pm or 4pm. ATMs are widely available and debit and credit cards can be used in most large supermarkets and chain stores. There are more than 200 banks operating in Hungary, however some of the more popular banks are Citibank, Magyar Nemzeti Bank, MKB Bank, Deutsche Bank and CIB Bank.
The tax year in Hungary ends on December 31st annually, tax
returns are filed before March 20th the following year. Individuals whose only income is their salary are not required to file tax returns as tax is paid on a monthly basis deducted by your company before the 12th day of each month. Self-employed people have to pay their taxes in advance and if there is a surplus at the end of the tax year they will receive a refund.All permanent residents in Hungary are required to pay tax on their income in both Hungary and abroad. In order to be classified as a permanent resident in Hungary, expats need to meet certain requirements regarding ownership of an apartment, permanent place of residence of your family and amount of time spent in Hungary (permanent residents need to spend at least 183 days of the tax year in Hungary). Foreign residents employed in Hungary are only required to pay tax on their income within Hungary.
Hungary has a progressive taxation rate, meaning that the more you earn the more you are taxed. The progressive rate is divided into two taxation rates: individuals earning between HUF 1 and 5 000 000 annually are expected to pay 17% in taxes; those earning above HUF 5 000 000 per year are taxed at a rate of 32% of the base in excess of the initial HUF 5 000 000. There is an additional 4% ‘solidarity tax’ charged to individuals who earn more than HUF 7 446 000 per year.
Hungary has double taxation agreements with a number of countries to prevent expats from having to pay tax in two countries. Agreements exist with America, Australia, Canada and a number of other European countries; it is best to check with the tax office in your home country as to whether your country has an agreement in place with Hungary.
