Investors who want to open a cryptocurrency company in Hungary have to take into consideration few aspects. One of the most important matters is that cryptocurrency is not considered yet a legal tender.
However, the Hungarian authorities are actively working at creating a suitable legal environment that can regulate cryptocurrency activities, as well as to protect the interests of those who invest in this type of currency.
If you need advice on the latest regulations, our specialists in company registration in Hungary can help you. Our consultants can also help you set up a business in this country or to obtain business licenses, including a crypto license in Hungary.
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How are cryptocurrencies defined in Hungary?
Investors who want to start a business in this sector or to obtain a crypto license in Hungary must know that this activity has recently received a statutory definition, recognized under the Hungarian law.
The definition has been established under the Crypto Asset Regulation, which stipulates that cryptocurrency refers to digital tokens that have a value and that can be transferred or stored with the assistance of digital technology.
Such technology is defined as shared ledger technology. Currently, most of the persons who are using cryptocurrency in Hungary are individuals, and this is why the local institutions aim at creating tax laws regarding personal income taxation.
Additionally, starting with 30 June 2024, investors benefit from a more solidified legislation, as the Hungarian authorities have adopted a new law regulating crypto-activities, the Act on Markets in Crypto-Assets (Act VII of 2024). The legislation incorporates the EU requirements applicable to this field, which are established under the EU Regulation 2023/1114.
The legislation provides new regulations concerning the issuance of crypto-assets and the provision of crypto-assets services on the country’s territory. The providers of these services must have relevant knowledge in the field and must also establish internal procedures concerning any consumer protection inquiry.
It also establishes the types of supervisory activities carried out by the Hungarian institutions, developed under the supervision of the Hungarian National Bank. The new law offers a clear understanding on the types of assets crypto-companies can issue, namely: electronic money, crypto-assets with a stable value and crypto-assets that do not qualify under the first two categories.
What are the types of cryptocurrency licenses available in Hungary?
As a part of the Hungarian company formation process, investors have to obtain a license which will allow them the right of developing their activities in a legal, formal manner. This also applies to the crypto industry, where currently investors have the possibility of acquiring 2 types of licenses, as follows:
- the crypto exchange license;
- the crypto wallet provider license.
The type of license one should acquire varies based on the type of activity to be carried out in this country. The 1st license is necessary for those who want to establish a cryptocurrency exchange platform. The 2nd is required for those who need to establish safety protocols for crypto wallets security.
Those who need to apply for a crypto license have to comply with certain basic legal requirements. The basic requirement is to open a company in Hungary, registered with the Hungarian authorities and which has its seat in Hungary.
Then, the applicant must make the proof of being compliant with all anti-money laundering laws and procedures, as well as with the know-your-customer (KYC) formalities. Our consultants in company registration in Hungary can advise you on the current regulations applicable for these 2 compulsory laws imposed to crypto businesses.
Are there any tax rules on cryptocurrency in Hungary?
Yes, even though the field is not fully regulated, as mentioned above, the local authorities constantly create new rules along with the associations that promote this industry, as it is the Blockchain Hungary Association. Although there isn’t a clear law regulating this sector, there are some tax regulations applicable to blockchain operations that were recently created.
Furthermore, the Hungarian authorities also reduced the level of taxation for cryptocurrency operators, in an attempt to increase the interest of investors and users. Local and foreign investors who want to open a cryptocurrency company in Hungary should know the following with regards to the taxation of this industry:
- cryptocurrency is currently taxed at a rate of 15% (personal income tax);
- this tax is charged on the profits obtained from this activity, and the current rate of 15% was reduced from 30,5%;
- the deadline to submit the tax return following these taxation rules was May 2024;
- some of the cryptocurrency operations are entitled to a tax amnesty for a period of 5 years.
Why open a cryptocurrency company in Hungary?
Although the business activities related to cryptocurrency are less developed, at the moment, there are few blockchain startups operating in this country. So, foreign investors who want to open a cryptocurrency company in Hungary will find certain opportunities on this market. Hungary has cryptocurrency businesses that were founded in 2016-2017.
It must also be noted that the country is a member of the European Blockchain Partnership and also applies the AMLD 5 (the Anti-Money Laundering Directive V – Directive (EU) 2018/843). The most important advantage is given by the level of taxation – a tax of only 15%, lowered in 2022 from 30,5% to stimulate investments in this market.
Regarding the tax rules and the implementation on all tax procedures, you can rest assured that with the assistance of our accountants in Hungary, your business will be tax compliant and will meet all its reporting obligations.
We also mention that although cryptocurrencies are liable to various taxes regulated by the Hungarian law, they are not charged with the value added tax (VAT), therefore there aren’t any accounting obligations to complete concerning this type of tax.
Statistics about the Hungarian cryptocurrency market
Those who will open a Hungarian company in the field of cryptocurrency are most likely interested in knowing some coordinates of the Hungarian crypto market. This market is developing, and in the list below our consultants have gathered some important characteristics of this market, as reported by an international crypto analysis platform:
- there are more than 1,000 jobs in the cryptocurrency industry;
- Hungary received cryptocurrencies accounting for $2,48 million and has sent $7,54 million;
- cryptocurrency mining accounts for 0,03% of the entire industry;
- there are 48 crypto ATMs;
- a share of 1,3% of the Hungarian population owns crypto (Hungarian population accounts for a little more than 9 million inhabitants);
- the country launched 6 initial coin offerings (ICOs).
Our consultants in company formation in Hungary can provide more details regarding this subject. If you need to open a Hungarian company our team can provide step-to-step assistance. Our team can also present information on whether your business will need a crypto license in Hungary, based on the latest legal procedures. Contact our consultants for consultancy services regarding this subject.