HTA is significantly tightening up its control of foreign capital income: the previously typical penalty-free supporting procedures are expectedly increasingly being replaced by legal compliance investigation, which may result in default penalties and even tax audits. The tax authority compares foreign bank data received from DAC2/CRS data reporting and the data indicated by the individuals in their tax returns. In case of legal compliance investigation, individuals have only a few working days to submit the requested documents to the authority.
As we have already written in our previous articles, the Hungarian tax authority regularly monitors individuals who receive capital income from abroad. With regard to income generated in 2018-2021, our previous experience has been that the HTA initiated a supporting procedure in cases where it detected discrepancies between the foreign income data received under DAC2/CRS and the data declared by the individual in his personal income tax return.
Supporting procedure: previous practice without sanctions
The supporting procedure is a short, 30-day tax procedure, the main feature of which is that it always ends without penalties. If the HTA found a discrepancy between the data received under DAC2/CRS and the taxpayer's return, it requested the individual to reconcile and clarify the data during the supporting procedure.
In practice, it often happened that taxpayers were unable to obtain all the necessary certificates from foreign banks within 30 days. In such cases, if the taxpayer or their representative was in active contact with the case handler, the tax authority typically acted flexibly:
- indicated that the bank statements and tax calculations could be sent at a later date,
- examined them together with the self-assessment, if necessary,
- and took the data received in this way into account outside the procedure when considering whether to initiate a further investigation.
If taxpayers fail to comply with their obligation to cooperate during the supporting procedure or within a reasonable deadline, the tax authority may initiate further investigations.
HTA tightens up: legal compliance investigation instead of supporting procedure
Based on the experience of RSM's tax experts, in November 2025, some individuals received notification that their tax liability on foreign capital income generated in 2022 would not be reviewed by the HTA under a supporting procedure, but that a legal compliance investigation had been initiated.
This means that the tax authority's procedure has become stricter in this area, as legal compliance investigations may result in sanctions, unlike supporting procedures.
What is a legal compliance investigation and what are its main features?
In the case of a legal compliance investigation, the audit also examines a specific period, and the deadline for conducting the investigation is generally 30 days, which can be extended by a further 30 days.
This procedure has an important feature from the taxpayers' point of view:
it does not create a closed period of inspection. This means that:
- during the investigation,
- and even afterwards, it is possible to submit a self-assessment for the given tax type and period.
As a result, several legal compliance investigations may be conducted for the same period.
Legal compliance investigation vs. supporting procedure: when will sanctions be imposed?
Unlike a supporting procedure, a legal compliance investigation may result in sanctions, and in certain cases, a default penalty may be imposed on taxpayers if errors are found during the audit. The good news is that this is always preceded by a request to remedy the deficiency.
If the taxpayer does not correct the error within the prescribed deadline, the tax authority may impose sanctions and/or initiate a tax audit after the legal compliance investigation has been completed.
The tax audit creates a period that has already been audited, and the auditor may uncover a tax difference, after which a tax penalty is imposed, the amount of which is at least 50% of the uncovered tax deficiency, but may be as high as 200% in the case of concealed income, and a late payment surcharge is also imposed on the taxpayer.
Do you have foreign investments/capital income? Preparation is now even more important
Due to the above-mentioned consequences, it is now even more important for individuals who have investments in foreign banks to start collecting the necessary bank documents and check that their tax returns are in order in this respect, so that if the tax authority launches a compliance investigation, they can submit the requested documents to the HTA in time and carry out a self-assessment if necessary.
When initiating a legal compliance investigation, the tax authority sets a deadline of 3 working days for the submission of documents. This may be extended by a few days at the taxpayer's request, but it should be noted that obtaining documents from foreign banks typically takes longer.
