Since 1 July 2023, interest income has been subject to a 13% social contribution tax (‘szocho’) in addition to the 15% personal income tax (‘szja’). Originally this was only for the duration of the emergency caused by the armed conflict in Ukraine. However, a new act published in the Hungarian Official Gazette on 18 June 2024, changed the situation.
Under the new rules, we will have to pay social contribution tax on interest income from 1 August 2024. In the month of July, we will still have to pay it under the transitional rules for the period of the emergency.
It should be emphasised that the tax on interest income will not increase from 1 August. In the same way, 15% personal income tax and 13% social contribution tax will be charged on the return on investments both today and from 1 August. The range of products concerned will also remain unchanged: fixed-term and demand deposits, investment funds, insurance, debt securities, etc. will be subject to the social contribution tax. This means that in the future, this tax should be expected on the investments in question, at least in the long term.
By Rozsa Rusvai-Darazs, Attorney at law, KCG Partners Law Firm
