No matter how good returns you can achieve with various stocks, you will still have to pay taxes on them. You should pay special attention to this topic, as there are countless outcomes and unique cases that can arise regarding the taxation of capital gains and dividends on stocks. I have now collected these and will also try to help you with a few practical examples so that you can navigate the topic.
🧭Taxation on shares: this is what happens as a general rule
In the case of stocks, your profits can come from two things:
- from the rise in the exchange rate exchange rate gain
- If the company pays dividends, then from dividends
Logically both must be taxed, but these are taxed differently in most countries. It is not only important that in which country are you tax resident, but also on which stock exchange the given security is listed, as this also determines the tax rate. It is very important to emphasize that the information described in the article is June 2025 reflect the status and primarily apply to Hungarian tax residents, but I will also give examples that they also apply to foreign tax residents. In other words, always check separately whether the laws have changed in the past period.
❗It is also worth seeking the help of a tax advisor who specializes in this. The information described here is for informational purposes only and may contain errors, for which I cannot be held responsible.❗
Controlled capital market transaction (CMT)
The above expression is Act CXVII of 1995 on Personal Income Tax, Section 67/A. The essence of this is that any transaction that involves the purchase and sale of an exchange-traded instrument through a regulated broker should be considered an ETU. This includes, for example, the trading of stocks, bonds, ETFs, currencies, etc. What is not included in the ETÜ? Barter, swaps, and for example, bitcoin and other cryptocurrencies.
Controlled brokers include brokerage firms registered in the European Economic Area, EEA states. In addition, any state where the country has some kind of supervisory body, such as the MNB in Hungary or the FED in the USA. So American transactions are also considered ETUs, which is important because ~60% of the world's total stock market capitalization is accounted for by US stock exchanges, so you will almost certainly have a relationship with American stocks.
Double Taxation Agreement
🔐What is withholding tax?
A withholding tax (in English: withholding tax) a tax that not paid directly by the income earner, but also the paying party deducts and transfers to the state, even before the income is paid. So the meaning of withholding tax is nothing more than a a tax rate that the investor does not even receive, because they are being held back by state agencies.
After the ETÜ, the second rule is to know whether the given country has a trade agreement with Hungary. Double Taxation Agreement. In this case, the service provider responsible for the given payment does not deduct the withholding tax from the dividend. How do you know if Hungary has such a multilateral agreement? You can check this on the website of the Ministry of National Economy, you can see the countries in the list on the right:
With countries with which Hungary has a multilateral agreement, they do not withhold double withholding tax from dividends, but you must pay it back at home. Example:
- We had an agreement with the USA before January 2024, 1, at which time they deducted from the dividend 15% withholding tax, no additional costs were incurred, if on TBSZ account was your investment
- After January 2024, 1, we no longer have such an agreement with the USA, therefore, the dividend 30% withholding tax deducted, no additional costs are incurred, if on TBSZ account you have your investment.
- if your investment is not in a TBSZ account, an additional 13% socho and an additional 5% tax are also added, so a total of 48% tax is required you would pay withholding tax
The broker will post the amounts on your invoices after deducting the withholding tax, so you don't have to deal with it anymore. The point is that the Hungary has such an agreement with all EEA member states., so if I buy shares listed on the stock exchanges of these countries., then they will definitely fall under its scope. Now let's look at how capital gains and dividends are taxed in reality.
📌Practical experiences: Based on the above, I unfortunately have to say that the taxation of American dividends has changed a lot in the last 2 years, so It's no longer really worth holding American dividend-paying stocks. The 30% tax burden is simply too high, especially since, for example, the same is 0% after dividends from UK stocks. However, the burden on exchange rate gains has not changed, so the taxation of these investments is exactly the same as before.
💸Taxation of capital gains and dividends on shares
Let's quickly clarify the difference between the two. When you bought the stock for less than you sold it for, that's exchange rate gain.
📈Taxation of exchange rate gains
💰📉Tax burden
- 15% personal income tax (PIT) burden
- You do NOT have to pay socho (13%), ha the transaction took place through a stock exchange, within the framework of a controlled capital market transaction
📝📤Declaration
- You must declare annually in the personal income tax return, usually by May 20th.
- The profit must be calculated per transaction: selling price – buying price – costs, such as commission.
- Ha at a foreign broker you, you usually have to calculate the amount yourself.
📉💔Loss offset
- A realized losses can be deducted from profits, in the same year.
- If there is not enough profit, delimitable for later years (4 years).
So the main rule is that you have to deduct 15% of the exchange rate gain in the form of tax, EXCEPT if you suffered losses on other positions and therefore did not realize a profit overall, because these can be offset against each other. The other case is that you realized a profit, i.e. you sold the stock at a higher price, but the shares were in a TBSZ account, which provides tax exemption, more on that later.
💰Taxation of dividends
Az dividend none other than the amount of cash paid out of a company's profits after owning shares. This is usually expressed as a percentage, for example, if a stock is priced at $100 and a dividend of $5 is paid, the dividend rate will be 5%. Since this is considered a direct cash payment that the broker credits to your account, capital gains are taxed much more strictly in most countries than dividends, so the taxation of dividends is usually more complicated and is influenced by many more factors.
💰📉Tax burden
- 15% PIT
- 13% socho
- BUT at most up to 24 times the annual minimum wage must pay social security (in 2025 this approx. 5,6 million HUF-him)
If the dividend comes from abroad, then two options come into play regarding the taxation of dividends:
- it is necessary to see whether the Hungarian state has the Double Taxation Agreement
- how big is it in that state withholding tax, which will be deducted
So there are quite a few possible outcomes here, let's take a closer look at them.
Withholding tax paid on stock dividends
Withholding tax, which can best be translated as withheld tax, is the withholding tax payable on dividends in a given country. Countries do not tax dividend income equally, Some places don't have it at all, while others have a particularly high tax burden, such as New Zealand.
🌐 Dividend withholding tax rate by country (2025, for individuals, alphabetical order)
| Country | Withholding tax | Country | Withholding tax | Country | Withholding tax |
|---|---|---|---|---|---|
| 🇦🇺 Australia | 30% | 🇦🇹 Austria | 27,5% | 🇧🇪Belgium | 30% |
| 🇨🇳 China | 10% | 🇨🇭 Switzerland | 35% | 🇨🇦 Canada | 25% |
| 🇩🇰 Denmark | 27% | 🇩🇪 Germany | 26,375% | 🇪🇸 Spain | 19% |
| 🇫🇷 France | 28% | 🇫🇮 Finland | 30% | 🇬🇧 United Kingdom | 0% |
| 🇬🇷 Greece | 5% | 🇭🇰 Hong Kong | 0% | 🇮🇪 Ireland | 25% |
| 🇮🇳 India | 20% | 🇮🇹 Italy | 26% | 🇯🇵 Japan | 15% |
| 🇰🇷 South Korea | 22% | 🇵🇱 Poland | 19% | 🇳🇱 Netherlands | 15% |
| 🇳🇴 Norway | 25% | 🇳🇿 New Zealand | 33% | 🇸🇪 Sweden | 30% |
| 🇸🇬 Singapore | 0% | 🇺🇸 United States | 15% | 🇹🇷 Turkey | 15% |
The table is not complete, it only includes the more developed markets, but there is a longer list, which broken down by country You can see the tax burdens. Some states differentiate between local citizens and foreigners, I won't go into that now, and you'll have to look into individual cases.
Based on the table above the country paying the dividend only transfers the deducted amount, In other words, it withholds the tax, which is why it is called withholding tax, and you only receive the net dividend. Basically, there are two cases:
- A Hungarian tax is deducted at less than 15%, In this case, you will have to pay the difference to the tax authorities. Domestic brokers usually do this on their own, except for the TBSZ account, as there is no additional tax obligation there. For example, in the case of Greece, the tax rate is 5%, meaning you will have to pay an additional 10% tax, except for the TBSZ account.
- A Hungarian tax rate of more than 15% is deducted, for example, German dividend taxation sucks because of the 26,375%, In theory, you could get the 15% or more back by filling out all sorts of forms. In practice, however, this is almost impossible, and below a certain portfolio size, it's not even worth bothering with.
📌Practical experiences: The above is a bit difficult to understand, but I will give you some examples that meant failure or profit for me at the time. These are completely real purchases, with real experiences. It is important that I bought everything on a TBSZ account, so the 13% socho and the +5% extra tax were not affected, “only” the 30% withholding tax. Let's see what experiences I gained:
- Simon Property Group (SPG): This is an American, dividend-paying property manager. I bought it on 2020-08-18, at 63 USD, which, due to subsequent dividend increases, pays a gross dividend of 13,33%! on cost. At that time, it was still subject to 15% withholding tax, which meant a dividend of 11,3%. After 2024-01-01, the withholding tax increased to 30%, so this fell to 9,33%. In other words, despite the -30%, it's still worth holding the stock, as the S&P 9,5 average is around 10-500%, and I'll definitely get most of that here.
- Philip Morris (PM): This is an American tobacco company, but it does NOT collect most of its revenues in the USA. I bought it at an average price of 79,08 USD on 2020-10-22, at which time it paid a dividend of 6,44% on cost. Since they do not deduct withholding tax from it, see below for why, I have been receiving this since then. Since Phillip Morris already sells products in the USA, if its revenues in this market increase, they may also impose withholding tax on this company, so the situation may change.
From the above, it is also clear that If a company is listed on two markets, the US and another, it is worth buying the stock in the one where less dividend tax is deducted from dividends.For example, it makes no sense to buy a British stock on the US market, as the dividend tax in the UK is 0%, while in the US it is 30%.
Taxation of stock dividends – There are always exceptions
As with all rules of thumb, there are some exceptions to the taxation of dividends on shares, some of which can be traced back to country-specific characteristics, while there are also differences resulting from specific foreign regulations. It is important to note that individual savings accounts are called differently in different countries, In the United Kingdom it is called ISA, in Hungary it is called TBSZand can only be used by local tax residents.
(I.e.Taxation of dividends on shares held in a TBSZ account
A Hungarian specialty is the TBSZ, or Long-Term Investment Account, and of course we use it because the taxation of TBSZ dividends is much more favorable than otherwise. The essence of it is that it exempts its owner from paying personal income tax. For example, if Béla Teszt made a profit of 1 million HUF on his investment, he would not have to pay the 15% personal income tax on the exchange rate gain, or 150 HUF, to the state treasury. TBSZ accounts can currently be opened with relatively many service providers:
- discount brokers: LightYear, Interactive Brokers
- brokers with a domestic banking background: Erste Invest (Erste bank), K&H Securities (former KBC Equitas)
- brokerage services of domestic banks: e.g. OTP
- foreign bank: Partner Bank AG (Inwest Mentor's service is also like this)
- domestic fund managers: Hold, Concorde
- foreign fund managers: Finax
What you need to open a TBSZ account:
- a contract must be concluded with a service provider for the TBSZ account
- You must transfer at least 25 HUF to the account for it to become active.
- you must deposit the money to be invested into the account, which you cannot withdraw until it is opened
The TBSZ account works very simply: in the year in which you open the account, the collection year begins. You can only deposit money into the account in the year of collection, and to be tax-free, you cannot open the account for 5 years. After 3 years, you will have to pay 15% tax instead of the 10% SZJA, and after 5 years, you can withdraw the money deposited there and the realized profit tax-free. There are no other restrictions, you can buy and sell instruments and perform stock market operations within the TBSZ account at any time. There is another advantage to the TBSZ account: you don't have to file a tax return for it, which in itself can be a great relief for many.
Basically, taxing dividends in a TBSZ account is more advantageous, but the TBSZ account does not exempt you from paying withholding tax either.
📌Practical experiences: When the TBSZ account expires, i.e. after the collection year + 5 years, you can ask the service provider to extend the TBSZ account, in which case the collection year does not start, but the capital will be locked for another 5 years. You can also convert part of your financial instruments into money, transfer it, then it will be tax-free, while leaving the rest in the TBSZ account and then only this part will be locked for another 5 years. If you would like to transfer part of your capital to another service provider, you can deposit the cash brought from the previous one into a newly opened TBSZ account. In this case, the first year will be a collection year again, i.e. the TBSZ will run for 1 + 5 years.
When should we deposit money into a TBSZ account?
I usually read 2 opinions regarding the TBSZ account:
- It is not worth depositing the money at the beginning of the collection year, because it is still liquid and the term does not increase.
- It is worth depositing the money at the beginning of the collection year, because then these amounts will also be exempt from tax liability, a good 5 years later, at the moment of dissolution.
I personally did that...I transferred the forint amount intended for investment to my main account, to which TBSZ belongs, and then converted it into dollars. When I saw a suitable target, I transferred as much of the amount in the main account to the TBSZ account as I needed to purchase it. After the collection year ended, I opened another TBSZ account. and I repeated the same operation every year. So basically, every year when I invested money, I had a new TBSZ account and was able to split my capital into 5 different parts. That is, I didn't have to deposit the entire amount into a single account, the money in the main account could be withdrawn without any limitations.
An important advantage regarding the taxation of dividends on shares held in the TBSZ account is that you do not have to pay SZOCHO on them even if you buy securities listed on a stock exchange of a non-EEA member stateThere is one restriction that Losses incurred on a TBSZ account cannot be offset against profits incurred on other accounts.and subtract them from each other.
????????Taxation of dividends on ADR shares
ADRs are shares of foreign companies that are listed on the stock exchange of another country so that local customers can buy them. A typical example of this is securities of European companies listed on American stock exchanges, for example, the Dutch pharmaceutical company Novo Nordisk (NVO). The stock listed on the Dutch stock exchange has the ticker symbol (NOVO B), while the security listed on the US stock exchange has the ticker symbol (NVO).
You can find out which stock is listed on which exchange by checking the ISIN code, or unique international identifier, of the security. The first few characters reveal which country's stock exchange the instrument is listed on. ADR securities listed on the American market are adr.com you can find it on the page.
But why is this important at all? I mentioned earlier that from a tax perspective, it matters that the country in which the security was listed, not the nationality of the company. In the above example, the share marked (NOVO B) was listed on the stock exchange of an EEA member state. This means that there is no need to pay socho afterwards, while the share marked "NVO" is available on the US stock exchange, which is not an EEA member state, meaning that its dividend is subject to socho and is subject to a 30% withholding tax even on a TBSZ account. Of course, if you buy the shares on a TBSZ account, then we are exempt from the obligation to pay socho.
Taxation of ETF dividends
How are ETFs taxed? Relatively simply, as long as it's a stock ETF, just like stocks, because in reality these are passive, exchange-traded funds with an underlying instrument. It is a legitimate question what is the situation with dividend-paying ETFs, and this is where the taxation of ETFs does differ from that of stocks. There are two types of dividend-paying ETFs:
- 🪙payout ETF (distributive): the ETF pays the dividend to the owner, from then on it behaves in the same way as a stock
- ⏪Revolving ETF (accumulator): the ETF does not pay out dividends, but reinvests them in itself, which is incorporated into the price. In this case, it should be considered as if it were a share that records a capital gain, i.e. it is taxed at 15% personal income tax
It's important to remember that ETFs actually only track the movement of an underlying product. If it's a stock, it's essentially the same as if you owned it as an individual stock, not as an ETF.
Taxation of MLPs, or Master Limited Partner dividends
There is a special American company form, the MLP. Typically, you can find these at oil companies, especially those involved in pipeline transportation. The types of oil companies are described in detail in OPEC, oil stocks, oil companies and that Playing Oil with Oil Stocks I have discussed it in articles, it is worth mentioning, for example, ENB, The EPD Or the MMP The essence of the Master Limited Partner company form is that the owners of the shares, the limited partners, assume part of the company's tax obligations. In return, the company can offer a higher dividend yield compared to other companies in the market that do not operate in MLP structures.
Dividends from US MLP companies are subject to a 21% corporate tax, which is deducted by the payer, so you only receive the reduced rate. Foreign brokerage firms, on the other hand, have a tax rate at the end of the year. K-1 A form called "Form 1 almost impossible. However, Hungarian tax residents who buy through a Hungarian brokerage firm do not receive this. Since Hungarian tax law does not recognize this corporate form, they behave as traditional dividend-paying shares, and the rules described there also apply to their taxation. What is the lesson from this? The 21% reduced dividend of an MLP company offering a dividend yield can be even higher than the 15% reduced dividend of traditional companies, due to the above-mentioned advantages.
📌Practical experiences: You can find MLPs almost only among oil companies, but even there they are becoming fewer and fewer, because most of them have changed to other corporate forms in the last few years. I have never bought such a stock, It's just not worth the hassle. which comes with it and since it is a small set, they were not very attractive. If you want to see the list of MLP companies, to this link press
🚬American companies that earn their income abroad
There is a special category among American companies, the 80/20 companies.
???????? What is an 80/20 company?
Olyan US-based company, which:
- generates at least 80% of its revenues abroad from active business activities,
- that is, the At least 80% of your income is not generated in the US.
In this case you either have to pay very little or no dividend tax at all after the company's dividend.
🚬I came across the above rule in connection with Philip Morris. Philip Morris (PM) Altria (MO) was spun off from the tobacco giant, partly to divide the US market and the rest of the world between them. While Altria operates in the US market and reports its revenues in dollars, Philip Morris collects them from various other currencies and then converts them to dollars in its statements.
Even though it is an American company, since the bulk of its income is not generated in the USA, the 30% dividend tax is not deducted by the payer, and you have to pay the 15% Hungarian personal income tax. Unless you buy the stock on a TBSZ account and do not redeem it before the 5-year maturity, in which case the dividend is exempt from paying personal income tax. This means in practice that Phillip Morris (PM), and all such companies have an advantage over other American companies in terms of dividend yield.
Summarizing the topic of dividend taxation and highlighting the main points
The two keywords are controlled capital market transaction and the Double Taxation AgreementIf these exist, then as a general rule you must pay 15% personal income tax on exchange rate gains, 15% personal income tax on dividend tax, and 13% social security tax. Realized losses and gains can be contrasted, so the former can be used to reduce the latter. If there is no double taxation agreement with a country, you will have to pay the withholding tax twice. The US market will be most affected by this, which means that in addition to the 30% withholding tax, you will have to pay 13% socho and another 5% other taxes, a total of 48%. You can open a TBSZ account, which has a maturity of 3 or 5 years and allows for tax exemption, but you can only transfer amounts to the TBSZ account for 5+1 years, but the securities can be traded freely within that period.
It is always worth reading up on other specialties separately, as well as what exactly happens if you open an account with a non-domestic broker, and how it modifies the taxation of stock dividends.
Frequently Asked Questions (FAQ)
Do you hold the shares in a TBSZ account?
Yes. As a Hungarian citizen, the tax advantage over a traditional cash-based account is so great that it is worth opening a new TBSZ account every year, and then the withdrawal of money is also solved (but if you do not want to withdraw anything from it, you can extend these).
Is there a savings account similar to TBSZ in other countries?
There is no account with such good conditions as the Hungarian TBSZ. It is also worth mentioning the English ISA account, which is an abbreviation for Individual Savings Account, and its essence is that:
Annual deposit limit: GBP 20 (for all ISA types combined)
Tax exemption:
- No personal income tax on the interest rate
- No tax for the dividend
- No capital gains tax for the exchange rate gain
Not transferable the annual limit for the following year – “use it or lose it”, and UK residents only can open and manage. However, it also provides full tax exemption on dividends. A total of four types of ISA accounts can be opened, but the amount of each cannot exceed the annual limit of GBP 20. However, a new savings account can be opened every year, so if you count the 000+5 year term of the TBSZ, then this means 1×6 GBP in savings.
What is the essence of the English EIS account?
Az ICE (Enterprise Investment Scheme) operating in the United Kingdom tax incentive program, which private investors can be used if invest in startups or small growth businesses.
🧾 The essence of EIS in brief:
- will 30% tax discount on the amount invested in the EIS, up to a maximum of GBP 1 million / year, or GBP 2 million if you invest in a knowledge-intensive company.
- Capital gains tax exemption: return on EIS shares tax-freeif at least You keep it for 3 years
- Loss mitigation: if the investment suffers a loss, tax base can be reduced.
- CGT deferral: capital gains tax payable on existing assets sold can be postponedif the amount is reinvested into EIS
What are the above used for? Primarily for startup investments and 30% of the invested amount is written off from taxes. About startups in these posts I wrote.
Taxation of investments in Germany
Although I am not a tax expert familiar with foreign markets, unfortunately investments are taxed quite badly in Germany. At the moment we do not know of any savings account specifically designed for savings purposes, similar to the Hungarian TBSZ or the English ISA.
However, there are forms with very low limits:
- Tax-free interest and dividend allowance (Freistellungsauftragt): EUR 1000/person/year, for married couples EUR 2000/person/year
- Retirement savings, with state support: EUR 175/person + child benefit, the amount paid is deductible from the tax base
Since Germans tax their exchange rate gains and dividends in the 26-28% range, Germany is not very generous with its tax residents in terms of savings.
What does ETÜ mean?
Az ETÜ meaning: Individual Capital Income After Taxation, or by other names individual capital income transactions. This capital income earned by individuals (e.g. sale of shares, capital gains) for taxation in Hungary conceptual and procedural framework.
In fact, ETÜ is used when a foreign service provider makes a profit from a transaction that the tax authority does not receive direct information about. For example, buying and selling shares, options, cryptocurrencies, foreign exchange profits, and so on, the profit generated from these must also be declared to NAV.
Taxation of ETÜ
Exchange rate or dividend gains earned under the ETÜ are taxed in the same way as the underlying forms. That is:
- in case of exchange rate gains: crypto, shares with 15% personal income tax (losses can be offset against profits if they occurred within the framework of a regulated capital market transaction, for example crypto is not one of these)
- dividend: according to the rules of the given country + 13% socho
Since TBSZ accounts must be reported to the Tax and Customs Administration, in principle the Tax and Customs Administration also receives information about them (the service provider reports your numbers).
How are Hungarian dividend-paying stocks taxed?
Essentially, Hungarian companies are taxed in the same way as foreign companies, with one exception: they do not have to pay 13% social security tax on dividends, meaning the burden is always 15% personal income tax.
Legal and liability statement (aka. disclaimer): My articles contain personal opinions and are written solely for my own entertainment and that of my readers. iO ChartsThe articles appearing on this website do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such advice in the future. The information provided here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT a guarantee to buy or sell financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.
