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While various governments’ tax agencies have started to aggressively target crypto income to boost tax revenues, crypto investors in Hungary might be getting a major tax break soon. The government is eyeing to significantly reduce taxes on income derived from cryptocurrency transactions, which could happen as early as next year.
Crypto investors may soon find Hungary a very attractive destination as its government is considering the possibility of reducing taxes on crypto trading by half in 2022, according to Cointelegraph. The move is aimed at making the country more competitive in the wake of the economic slowdown brought by the COVID-19 pandemic.
The government’s plan was revealed by Hungary’s Finance Minister Mihály Varga in a Facebook post on Tuesday. The plan to reduce crypto investors’ tax burden is part of the government’s post-COVID-19 stimulus programs.
Lawmakers are reportedly mulling on the possibility of reducing crypto taxes down to 15 percent. This is almost a 50 percent reduction from the current rate of 30.5 percent. The move is aimed at making Hungary a competitive jurisdiction in terms of crypto taxation.
Hungary’s cryptocurrency regulations are still underdeveloped. However, buying and selling of Bitcoin and other crypto-assets are classified as “other income” for taxation purposes, according to Btcmanager.com.
After the trading frenzy during the 2017 bull market, crypto trading activity in Hungary can be considered modest compared to other countries. However, a resurgence in crypto trading activity was observed starting in 2021 as the crypto market rallied once more.
As crypto adoption and usage surged, governments worldwide are starting to get serious in their tax collection efforts from income derived from the industry. For instance, the Norwegian Tax Administration issued a warning to crypto traders ahead of its recent deadline for filing tax returns on April 30, warning taxpayers that failure to do so might result in the taxpayer “paying additional tax.”
Spain’s tax agency also issued letters to 14,800 residents who are under watch for their failure to declare their cryptocurrency holdings. The agency warned that violators could face fines of up to 5,000 euros in fines, which is around $5,900.
