The Hungarian Parliament adopted a tax package in June, amending the Financial Transaction Tax Act to close existing loopholes and ensure that all market participants are subject to the tax.
The new provision targets internal balance adjustments within payment service providers’ systems, i.e. transactions that previously escaped taxation. This change, effective from 20 July 2025, is widely seen as a response to practices by fintech firms like Revolut, which leveraged such technical solutions to minimize tax liability.
Commercial banks have long criticized the regulatory disparity, arguing that foreign fintech players enjoy competitive advantages by being exempt from certain obligations imposed on domestic institutions, such as operating ATMs, offering Hungarian-language customer support, or fully paying the transaction tax. Fintech firms, in contrast, contend that limited exemptions are crucial to support innovation during early growth phases.
The amendment adds a new rule to the Act, clarifying that tax applies even to internal transfers where a provider debits and credits client accounts solely within its own system. The goal is to prevent future tax avoidance through such internal mechanisms.
By Borbala Maglai, Attorney at Law, KCG Partners Law Firm
