Banks & Finances Hungary

The Hungarian banking system offers a wide range of services for foreign citizens, but the conditions and requirements may differ depending on the specific bank.

 

OTP Bank: The largest bank in Hungary with an extensive network of branches and ATMs; offers services in English and provides various account packages, including accounts in forints and foreign currencies.

 

K&H Bank: Part of the Belgian KBC group; provides services to both individuals and businesses; offers several account packages, including accounts in forints and foreign currencies; services in English are available, but document requirements may vary.

 

Erste Bank: An Austrian bank with a presence in Hungary; offers a wide range of services for foreign clients; provides accounts in forints and foreign currencies, as well as services in English.

 

Raiffeisen Bank: A subsidiary of the Austrian group; offers various types of accounts including standard, salary, and premium accounts; services in English are available, but document requirements may vary.

 

UniCredit Bank: An Italian bank with a presence in Hungary; provides services to both individuals and businesses; offers accounts in forints and foreign currencies, as well as services in English.

Opening a bank account in Hungary is an important step for immigrants, allowing them to manage finances, receive salaries, and pay bills. The procedure for opening an account and the required documents may differ depending on the selected bank and your residency status.

 

Basic steps for opening a bank account

 

Choosing a bank: Several major banks in Hungary offer services to foreigners. It is recommended to familiarize yourself with their offerings and choose a bank that suits your needs.

 

Preparing the necessary documents: The standard set of documents for opening an account usually includes:

- A valid passport or identity card.

- Proof of address (rental agreement, utility bill, or an official letter confirming your address).

- Residence permit or visa: If you are not an EU citizen, a valid visa or residence permit may be required.

 

Visiting the bank branch: Most banks require your personal presence to open an account. It is recommended to schedule an appointment in advance to avoid waiting.

 

Filling out a form and signing an agreement: You will be offered to fill out a form with personal data and sign a service agreement. Some banks may offer services in English.

 

Making an initial deposit: Some banks may require a minimum initial deposit to activate the account.

 

Note that the account opening process may take some time, especially for citizens of non-EU countries. It is recommended to prepare all necessary documents in advance and, if necessary, use the services of a translator.

Using ATMs:

- Choosing an ATM: It is preferable to use ATMs of major Hungarian banks. They generally offer better conditions and lower fees compared to independent operators.

 

- Avoid independent ATMs: ATMs owned by independent operators (such as Euronet) often charge higher fees for cash withdrawals.

 

Commissions and fees:

- Issuing bank commission: Your bank may charge a commission for cash withdrawals abroad. Before traveling, check with your bank about this commission rate.

 

- ATM owner's bank commission: Some Hungarian banks may charge an additional fee for using their ATMs with foreign cards. Information about the fee amount usually appears on the ATM screen before confirming the transaction.

 

- Dynamic currency conversion (DCC): When withdrawing cash, the ATM may offer to convert the amount into the currency of your card at its own rate. This rate is often less favorable. It is recommended to always choose the option to withdraw in the local currency (Hungarian forints) without conversion.

 

Cash withdrawal limits:

- ATM limits: The maximum withdrawal amount per transaction can vary depending on the bank and specific ATM. It is usually around 100,000 forints.

 

- Your card limits: Your bank may set daily or monthly cash withdrawal limits. It is recommended to check these limits before traveling and request an increase if necessary.

 

Recommendations:

Bank notification: Before traveling, inform your bank about your planned stay in Hungary to avoid card blockage due to suspicious activity.

Withdrawing large amounts: To minimize the number of transactions and, consequently, fees, it is recommended to withdraw large amounts of cash at once, considering the set limits.

Security: Practice caution when using ATMs: choose ATMs in safe and well-lit locations, cover the keypad when entering your PIN, and be aware of your surroundings.

Bank transfers (SWIFT)

 

Most Hungarian banks offer international transfer services via the SWIFT system. To send funds, you will need to provide the recipient’s details, including name, account number (IBAN), and the recipient bank's SWIFT/BIC code. Fees and timing for such transfers can vary depending on the bank and destination country.

 

Online money transfer services

 

Wise: Offers international transfers at real exchange rates with low fees. The service supports transfers to over 80 countries and 40+ currencies. You can send money online via the website or mobile app.

 

Western Union: Allows sending money online or through service points in over 200 countries and regions. Transfers can be received in cash or credited to a bank account. Fees and timing depend on the chosen sending and receiving method.

 

Postal transfers

 

Hungarian Post provides international money transfer services. This method may be less convenient and slower compared to bank and online transfers but can be useful in certain situations.

Mortgage lending for foreigners

 

EU residents: Citizens of EU countries residing in Hungary have wider access to mortgage loans. Banks can offer them loans up to 70% of the property's market value with a repayment term from 1 to 35 years.

 

Non-residents and citizens of third countries: For foreign citizens, who are not EU residents, obtaining a mortgage in Hungarian banks can be challenging. Many banks require a permanent residence in Hungary or another EU country. However, there are options to approach international banks like German credit institutions, which may offer a mortgage under the following conditions:

- Loan amount: up to 50% of the property's value.

- Interest rate: from 7% per annum.

- Loan term: from 1 to 10 years.

- Additional costs: about 1% of the loan amount for mortgage arrangement.

 

Consumer loans

 

Foreign citizens can also obtain consumer loans in Hungarian banks. Conditions depend on the specific bank and the applicant's status.

 

Borrower requirements:

 

Documents: Passport, permission to purchase property abroad, income statement, sales contract.

Age: The minimum borrower age is 25 years, maximum is 70 years.

Credit history: A positive credit history may increase the chances of loan approval.

 

Recommendations

Consultation with the bank: Before applying, it is recommended to contact the chosen bank to clarify current conditions and requirements.

 

Note that lending conditions may change, so it is recommended to obtain up-to-date information directly from banks or financial advisors.

Paying for large purchases, such as real estate or a car, in Hungary requires adherence to certain procedures and consideration of local financial practices.

 

Bank Transfer: The most common and secure method of paying for real estate in Hungary is a bank transfer. After signing the purchase agreement, the buyer transfers the agreed amount to the seller's account. It is important to ensure that all bank details are correctly stated and that the transfer is made in accordance with the terms of the agreement.

 

Escrow Account: For deal security, the parties may use an escrow account, which is opened with a notary or a bank. The buyer deposits the funds into this account, and they are transferred to the seller only after all terms of the agreement have been fulfilled.

 

Cash Payments: Hungarian law limits the use of cash in major transactions. According to the current rules, the maximum cash payment between individuals should not exceed 1.5 million forints (about 4,000 euros). Therefore, cash is not recommended for real estate payments.

 

Payment for a Car

 

Bank Transfer: As with real estate, a bank transfer is the preferred payment method when buying a car. The buyer transfers the agreed amount to the seller’s account, after which all the necessary documents for vehicle registration are processed.

 

Cash Payments: When purchasing a car with cash, one should consider the aforementioned restrictions on cash amounts. If the car’s cost exceeds 1.5 million forints, it is recommended to use a bank transfer.

 

Recommendations

 

Opening a Bank Account: For the convenience of conducting large transactions, foreign citizens are advised to open a bank account in one of the Hungarian banks. This will streamline the process of transferring funds and avoid possible delays.

Consultation with a Lawyer: Before making major purchases, it is advisable to consult with a local lawyer who will help navigate the intricacies of the transaction and ensure compliance with all legal formalities.

Bank Deposits

 

Term Deposits: Banks offer deposits with a fixed term and interest rate. Interest rates depend on the deposit term and the current economic situation. As of September 2024, the average interest rate on deposits in Hungary is 5.5%.

 

Savings Accounts: They allow for free depositing and withdrawal of funds with interest accrual. Interest rates are usually lower than those of term deposits but offer greater flexibility.

 

Investments in Stocks

 

Stock Market: The Budapest Stock Exchange provides access to shares of Hungarian and international companies. Foreign investors can open brokerage accounts and trade stocks through licensed brokers.

 

Investment Funds: Many banks and financial institutions offer mutual investment funds, allowing investment in a diversified portfolio of stocks and bonds.

 

Investments in Real Estate

 

Real Estate Purchase: Investing in residential or commercial real estate can provide stable rental income and potential asset value growth. Starting from 2024, foreign investors can obtain residency in Hungary for investments of 250,000 euros or more in real estate or investment fund shares.

 

Real Estate Investment Funds: They provide the opportunity to invest in real estate without the need for direct management. Such funds distribute rental and sales income among investors.

 

Government Bonds

 

Domestic Bonds: The Hungarian government issues bonds with various maturities and interest rates. They are considered a reliable tool for savings and investments.

 

Pension and Insurance Products

 

Pension Funds: Voluntary pension funds allow accumulating retirement funds with the possibility of receiving tax benefits.

 

Insurance Savings Programs: Insurance companies offer products that combine life insurance with the ability to save and invest funds.

 

Recommendations for Investors: Consulting with a financial advisor will help determine an optimal investment strategy, considering individual goals and risk profile.

Hungary has a well-structured tax system that applies to both residents and non-residents earning income in the country. Foreign nationals working or doing business in Hungary are required to comply with local tax regulations.

 

Tax rates

- Income tax: A flat rate of 15% is applied to most types of income.

- Social contributions: Employees pay 18.5% of their salary as social contributions.

 

Double taxation agreements:

Hungary has agreements with over 80 countries to prevent double taxation. This allows foreigners to avoid being taxed twice on the same income in two countries. To apply the provisions of the agreement, a certificate of tax residency from their own country may be required.

Determination of tax residency

 

Tax residency status in Hungary is determined by the following criteria:

 

- Permanent residence: If an individual has a permanent residence in Hungary, they are considered a tax resident.

 

- Center of life interests: If a person's personal and economic ties are primarily in Hungary, they may be recognized as a tax resident.

 

- Presence in the country: If a person spends more than 183 days in Hungary in a calendar year, they become a tax resident.

 

Tax residents are taxed on their worldwide income, while non-residents are only taxed on income derived from Hungarian sources.

 

Tax declaration obligations

 

- Residents: Must file an annual tax return reflecting all income earned both in Hungary and abroad.

 

- Non-residents: Must declare and pay taxes only on income earned in Hungary, such as wages, rental income, or dividends.

 

Tax filing procedure

 

Registration with tax authorities: Foreign nationals must obtain a tax number from the National Tax and Customs Administration.

 

Collecting documents: All supporting documents regarding income, withheld taxes, and possible deductions must be gathered.

 

Filling out the declaration: The declaration is submitted via the NAV online system or on paper. The filing deadline is May 20th of the year following the reporting year.

 

Tax payment: If the declaration results in a tax liability, it must be paid by May 20th.

 

Recommendations

Consultation with a tax specialist: Foreign nationals are advised to consult local tax advisors to fulfill all obligations correctly.

Self-employment registration:

 

Foreign nationals wishing to work in Hungary as self-employed or freelancers must obtain the appropriate residence permit. From January 1, 2024, a new law defining the purposes of entry and stay, including the residence permit for a self-employed migrant, has come into force.

 

Tax regimes for the self-employed

 

In Hungary, there are several tax regimes for the self-employed:

 

General tax system: A standard income tax rate of 15% applies to net profit. Additionally, social contributions are paid.

 

Patent tax system: Previously popular among freelancers, this system imposed a fixed monthly tax. However, changes made in 2022 limit its application.

 

Social contributions:

 

Self-employed individuals are required to pay social contributions, ensuring access to public social services, including healthcare and pensions. The total social contribution rate is 31.5% of income, with self-employed individuals paying both the employer's and employee's share.

 

Benefits and deductions

 

Self-employed individuals can take advantage of various tax deductions and benefits, such as:

 

- Expenses related to professional activity: includes office rent, equipment purchases, transportation expenses, and other justified costs.

 

- Pension Contributions: Voluntary contributions to private pension funds can reduce the taxable base.

 

Administrative Obligations

 

Self-employed individuals are required to keep accounting records, file tax declarations, and pay taxes within the established deadlines. It is recommended to consult a professional accountant or tax advisor to ensure compliance with all requirements.

 

Additional Resources:

 

For more detailed information, it is recommended to refer to official sources, such as the National Tax and Customs Administration of Hungary (NAV, www.gov.hu), as well as professional consultants specializing in tax legislation for self-employed individuals.