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 start at five forint and go up to 200 forint.
The general rate of inflation in the country is around 3 percent, 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. An official date for this has yet to be set.
Banking in Hungary
Banking in Hungary is relatively simple and up to the standards that expats from other Western countries have become accustomed to. There are more than 200 banks operating in Hungary, among them many foreign-owned banks. Some of the more popular banks in Hungary include Citibank, Magyar Nemzeti Bank, MKB Bank, Deutsche Bank and CIB Bank.
Banking hours in Hungary are from 9am to 5pm from Monday to Thursday, and on Fridays banks tend to close early, usually 3pm or 4pm. Most banks are closed on Saturdays.
Opening a bank account
Internet banking comes standard with most bank accounts. 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 USD 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.
ATMs and debit/credit cards
ATMs are widely available in Hungary and debit and credit cards can be used in most large supermarkets and chain stores.
Expats wishing to have a debit card will need to make an initial deposit of about USD 250, and sometimes 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.
Taxes in Hungary
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 percent in taxes; those earning above HUF 5,000,000 per year are taxed at a rate of 32 percent of the base in excess of the initial HUF 5,000,000. There is an additional four percent ‘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 the USA, 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.