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The Social Tax on Interest Income Remains with Us

Hungary
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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

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com