Tax on long-term investment accounts tightened as of 1 January

From 1 January, an amendment came into force which means that,

in addition to the 15% interest tax, a SZOCHO will also be payable on such an account if it is broken within the 5-year holding period.

Although the 13% social contribution tax on top of the 15% interest tax came into force in the savings and investment market in the summer of 2023, it did not apply to the TBSZ, as it is regulated by another paragraph of the Personal Income Tax (SZJA) Act (profits on TBSZ accounts are considered as income from permanent investment, not interest income).

However, according to the latest announcement of the Ministry of National Economy (NGM), this exemption has been abolished, the reason given being that the number of TBSZ accounts has increased dramatically for reasons contrary to the legislator's intention. According to the decision,

tax relief or tax exemption is only applicable if savers hold their financial assets in their long-term investment accounts for a long period, i.e. for at least 3 or 5 years.

This has already been announced in the tax laws for this year, which means that from January, anyone who breaks their TBSZ

• within 3 years will pay a 13% SZOCHO,
• while those who think about breaking it within 3-5 years will get an 8% SZOCHO,
• and after 5 years the SZOCHO will drop to 0%.

Although for many this is a painful change, it is a restoration of the purpose of the TBSZ fund, a decision taken by the legislator to explicitly encourage long-term savings.

How does a TBSZ account work?

The first year is the so-called accumulation year: only in this year does the account holder have the possibility to make payments into the account, this period does not count towards the investment period. In any case, the accumulation period ends on 31 December of the year the account is opened. The savings period starts on 1 January of the following year. No more than one TBSZ account may be opened with a single provider in any one year.

It is important to note that in all cases, it is the TBSZ holder who must declare and pay the tax on the basis of the certificate issued by the service provider.

By default, two types of TBSZ can be opened:
- one type can only be used for fixed-term deposits, this is the Long-Term Investment Deposit Account (TBBSZ);
- whereas the other type of account can hold investments in securities (e.g. shares, investment fund units, bonds), called a Long-Term Deposit Securities Account (TBÉSZ).

A két számlatípus között nincs átjárhatóság, de meg lehet nyitni egyszerre akár mindkét számlát is. A szerződéskötés feltétele, hogy a számlanyitáskor minimum 25 000 forintot vagy annak megfelelő külföldi fizetőeszközt (például eurót) kell befizetni.

Under certain conditions, the owner of the TBSZ may transfer the total amounts and assets registered in the account to another provider without this constituting a break in the commitment period. For details, it is recommended to contact the service provider.

The table below summarises the changes to the TBSZ that will take effect from this year:

Cover photo (for illustration purposes only): Getty Images