NAV experts respond to questions regarding the taxation of income from crypto transactions in Hungary

As a reminder, from January 1st, 2022, new rules are applied to the taxation of income from transactions with crypto assets, which, under a transitional provision, can be applied as early as income made in 2021. The essence of the regulation is that an Individual should only tax crypto assets if he converts them into fair value, such as legal tender, or buys movable property or real estate from it. The rules also apply to income in 2021.

From transactions with crypto assets, a personal income tax of 15 percent is payable on the transaction gains made in the tax year.

In order to establish income, all certified expenditures spent on the acquisition of crypto assets in the current year must be deducted from the total revenue of transactions with a crypto asset in the current year. Expenditures may include certified expenditures not related to the specific transaction but related to the holding of crypto assets in the current year, such as fees and commissions.

If the amount of revenue is more than that of expenditure, a transaction profit is generated, and if the amount of expenditure for the current year exceeds the amount of revenue, a transaction loss will be established.

It can be taken into account as a year's expenditure on acquisition

– the purchase price when buying cryptocurrency;

– certified expenditure incurred in the interest of the activity when mining cryptocurrency;

– the certified expenditure spent on the acquisition of the property, but not more than the normal market value of the property at the time of sale if the crypto-asset was acquired by the individual at the time of the sale of an asset, such as movable property, immovable property, in return for it;

– the normal market value of the acquired crypto-asset is established at the time of monetization if the crypto-entrepreneur acquired it as a consideration for the private activity or provision of services.

When calculating transaction gains and transaction losses, certified expenditure on the acquisition of crypto assets in 2021 should also be taken into account even if in 2021 this crypto asset was not converted into fair value by the individual.

There is no need to pay tax if the proceeds of the transaction are not more than 10 percent of the minimum wage, i.e. HUF 20,000, provided that:

– the individual does not receive any income from other transactions of the same subject matter on the date of receipt of the proceeds, and

– in the tax year, the amount of these revenues does not exceed the minimum wage, i.e. HUF 200,000.

The income from the crypto transaction must be indicated by the individual in his self-prepared 21SZJA return or supplemented by the draft tax return prepared by the NAV.