New transaction tax forces Hungarian banks to hike fees

In July this year, the government approved a new tax package to shore up the state’s budget. In a government decree they amended the Financial Transaction Tax (FTT) and the Securities Transactions Tax (STT) from 1 August 2024, with both rates raised to 0.45% from 0.3% per transaction with a maximum amount of HUF 20,000 to be paid by credit institutions and investment service providers.

The tax rate was also raised to 0.9% from 0.6% for cash withdrawals from a payment account and cash withdrawals by means of a cash substitute payment instrument.

In addition, from 1 October, 2024, a new supplemental financial transaction tax was introduced on the currency conversion transactions of banks. The new tax also has a rate of 0.45% with a cap of HUF 20,000. 

The taxes must be declared and paid to the state by the bank, financial services provider or currency converter, but can be passed on to business customers. No pass-on for the general public is allowed until 31 December, after which the fees for retail customers are expected to rise too.

OTP, Erste, Magnet and UniCredit will pass on the new supplemental transaction tax to their business customers from 1 October, while K&H will do so from 30 October.

However, CIB Bank, Gránit Bank, MBH Bank and Raiffeisen Bank have not yet announced such changes. According to our sources, where this item does not appear in the lists of conditions, the bank may widen the spread, which is the difference between the buying and selling rate, but this may not be applied from the first moment either.

The additional transaction tax on foreign currency conversions puts Hungarian banks at a competitive disadvantage and could lead to increased customer migration.

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