Digital currency investors in Hungary could be in line for a tax cut as part of new stimulus measures being proposed by the government designed to make the country more competitive.
Authorities in Hungary are weighing proposals which would slash the applicable rate of tax on digital currency gains down from 30.5% to just 15%, part of a package of measures being rolled out to help boost economic recovery in the wake of the damage caused by COVID-19 restrictions.
In a recently published video, Finance Minister Mihály Varga set out a range of measures on the table through 2022, with the digital currency tax measures expected to play a significant role in making Hungary a more tax-competitive jurisdiction.
According to sources in Hungary, the government is keen to carve out a niche for the country within the European digital currency scene, with moves like the tax reduction expected to help attract more investors to the country.
At present, digital currency regulation in Hungary is less developed than in other countries, with the trade in digital assets classified as ‘other income’ for tax purposes. While volumes of digital currency trading in the country remain low, activity in 2021 is up on previous years, with the country now hoping to emerge as a regional destination of choice for digital currency sector businesses and investors.
It comes as the country’s central bank continues progress on a central bank digital currency. Back in August 2020, representatives from the Hungarian central bank joined a roundtable discussion with their counterparts at the Bank of England, the Swiss National Bank and others to discuss future rollouts of central bank digital currencies.
With Hungary now unwinding much of its coronavirus restrictions, the shift in focus now towards economic recovery is likely to create a bigger role for digital currency and associated sectors within the Hungarian economy, with the tax advantages expected to help encourage growth.