Hungary to Cut Tax on Crypto Earnings to 15% from 30.5% to Help the Economy Recover
The finance minister expects “several billion forints” of revenue from this tax reduction while its inflation spiked to above 5% in Q2, the fastest in Europe and the highest since 2012 as it sees no reason to make substantial cuts in spending next year.
Hungary is all set to reduce tax on cryptocurrency earnings by more than 50%, from the current rate of 30.5% to 15%, said Finance Minister Mihaly Varga in a Facebook post.
“Tax cuts and tax simplifications will continue next year: we will also help relaunch the economy through tax policy.”
As part of the post-COVID19 relief efforts, the government is considering cutting the taxes on crypto trading. It expects “several billion forints” of revenue from it, as per the video message posted by the finance minister.
In Hungary, buying and selling crypto assets are classified as “other income” for the purpose of taxation.
Hungary, which has also been involved in a discussion of central bank digital currency (CBDC) like the rest of the world, has been seeing an uptick in cryptocurrency trading this year, much like everywhere else, thanks to the raging bull market.
On Monday, Varga also said that he was not afraid of the economy overheating as it recovers from the pandemic and that there is no reason to make substantial cuts in spending next year.
“We are not afraid of the economy overheating, but we continuously monitor inflation, the forint's exchange rate, and deficit and debt indicators,” he said in an interview on business website portfolio.hu.
“We do not see any problems that should force us to cool the economy already in 2022 … and make bigger spending cuts.”
Prime Minister Viktor Orban had said he would insist on an expansionary budget for 2022 following a deep 2020 recession caused by the pandemic and resulting lockdowns.
However, inflation is spiking to above 5% in the second quarter, increasing more than estimated.
Inflation in Hungary has been increasing the fastest in Europe and the highest since 2012. However, core inflation, which doesn’t include volatile food and energy prices, only rose 3% in April, the lowest in two years.