Updated: 2023-11-13

What is a Long-term Investment Account - "Tartós Befektetési Számla" (TBSZ)?

"Tartós Befektetési Számla" or Long-term Investment Account is abbreviated as TBSZ. Its most significant advantage is that after 3 or 5 years respectively, the tax burden on investment returns will be reduced to 10% or 0% from the standard 15% - when realizing the yield.

Who can open a TBSZ?

Any natural person above 18 years old who is a Hungarian tax resident.

Currently, we do not offer TBSZ for condominiums, fiduciary trusts nor private foundations.

How can I open a TBSZ?

You can open a TBSZ directly in the Client Portal or initiate it as a new customer on the website, just like opening any other account. For existing customers, the account opening process takes only a few minutes.

Why do I need to open an Individual Trading account to open a TBSZ?

Your TBSZ will be linked to the Individual Trading account (“primary account”) as the TBSZ can be funded only from an Individual Trading account, and in case the TBSZ matures or breaks, the assets it holds are swept to the Individual Trading account. Additionally, the TBSZ automatically inherits all trading permissions and settings from the Individual Trading account.

Can I open multiple TBSZ?

You can open 1 TBSZ each calendar year with us. (Starting from 2023.)

How can I deposit money into the TBSZ?

You can transfer money to the TBSZ from your primary account. Money deposit is only allowed during the collection year.

How can I place securities into the TBSZ?

You can only deposit money into the TBSZ. The money can be transferred directly from your primary account. Money deposit is only allowed during the collection year.

What is the minimum and maximum amount I can deposit into the TBSZ?

During the collection year, you can deposit any amount with any frequency into the account. The initial deposit must reach at least 25,000 HUF or an equivalent value in any other supported currency. There is no upper limit for the deposited amount.

What is the "collection year"?

The "collection year" refers to the calendar year of opening the account, also known as year 0. You can only deposit money into the account during this calendar year. After the collection year, you can no longer make further deposits, but you can open a new TBSZ with the current calendar year as its collection year.

The lock-in period begins in the year following the collection year.

What is the lock-in period?

This is a 5-year period following the collection year, separated into a 3-year and a 2-year periods. During this time, you can no longer make deposits but can trade with the funds you have already deposited. The 3-year period is called Holding Period 1, while the 2-year period is called Holding Period 2.

At the end of the third year (i.e., the end of Holding Period 1), you can partially or fully withdraw your assets from the account. At the end of the fifth year (i.e., the end of Holding Period 2), you can terminate, or partially or fully reinvest your assets in another TBSZ.

What is Holding Period 1?

Holding Period 1 is a 3-year period that starts in the calendar year following the collection year, beginning on January 1.

If you break the account during this time, you will be required to pay the standard 15% personal income tax on your returns. The 13% social contribution tax (“szocho”) should not apply to this income.

At the end of this period (between December 1-30), you need to notify IBKR by submitting your statement whether you want to withdraw your assets partially or fully to your primary account. If you decide to do so, make sure that the value of assets remaining in your TBSZ is at least 25,000 HUF; otherwise, the account must be terminated.

How can I submit my statement at the end of the third year?

You will receive notification in the Client Portal about the deadline for making the declaration and instructions on how to do it.

What happens if the 3-year period expires, and I don't submit my statement?

In the absence of a declaration, the account will automatically move into the next, 2-year lock-in period, known as Holding Period 2, carrying your assets in their entirety without any changes.

What is Holding Period 2?

Holding Period 2 is a 2-year period that starts in the calendar year following Holding Period 1, beginning on January 1.

If you break the account during this time, you will be required to pay a reduced, 10% personal income tax on your returns. The 13% social contribution tax ("szocho") should not apply to this income.

At the end of this period your TBSZ will be terminated, unless you declare (between December 1-30) that you want to transfer your assets partially or fully to another TBSZ opened in the second year of Holding Period 2. If you decide to do so, make sure that the value of the assets to be transferred is at least 25,000 HUF; otherwise, the transfer will not take place, and your assets will be transferred in their entirety to your primary account.

How can I submit my statement at the end of the fifth year?

You will receive notification in the Client Portal about the deadline for making the declaration and instructions on how to do it.

What happens if the 5-year period expires, and I don't submit my statement?

In the absence of a statement, the account will be terminated, and the assets will be transferred to your primary account in their entirety. In this case, the achieved returns are tax-exempt, and you are not obligated to include them into your Hungarian annual Personal Income Tax return.

If you are a foreign tax resident in addition to your Hungarian tax residency, please consult the tax authority or tax advisor of the country of your tax residency on the tax liabilities arising under your tax law.

When can I trade or adjust my investment portfolio in the TBSZ?

Within the TBSZ, you are free to manage your investments, which means you can trade, open or close positions from year 0 until the end of the fifth year.

Which financial instrument can be traded in the TBSZ?

Any instrument that you can trade on your primary account can be traded in the TBSZ, as the TBSZ inherits all trading permissions and settings of the primary account.

Is investment loan available in the TBSZ?

No. Investment loan (margin) is not supported in the TBSZ.

Is Stock Yield Enhancement Program (SYEP) available in the TBSZ?

No, SYEP is not supported in the TBSZ.

When can I withdraw assets from the TBSZ?

You can withdraw assets at the end of the third year, which is the end of Holding Period 1. By declaring your intent between December 1^st and 30^th, you can make partial or full withdrawals on January 1^st.

You can modify your declaration multiple times during this time. A new declaration overrides the previous one. If the assets requested for withdrawal are not available on December 31, the requested withdrawal will not be executed, and the assets will remain in the TBSZ. For the returns of the amount withdrawn, you will be liable to pay 10% personal income tax. The 13% social contribution tax ("szocho") should not apply to this income.

If you withdraw assets before the end of the third year (within Holding Period 1), the account will be terminated, and you will be taxed at the standard, 15% tax rate on the returns.

If you withdraw assets after the end of the third year, but before the end of the fifth year (within Holding Period 2), the account will be terminated, and you will be taxed at a reduced, 10% tax rate on the returns.

However, the 13% social contribution tax ("szocho") should not apply to this income in either case.

How do I pay the tax?

You are responsible for determining, declaring, and paying the tax to the NAV through self-assessment. If you withdraw assets from your TBSZ - fully or partially - before your TBSZ ceases, as well if your TBSZ ceases at the end of Holding Period 2, then you will be provided a TBSZ tax certificate issued via the Portal until 31 January of the following year.

If your TBSZ ceases at the end of Holding Period 2 (after 5 years from the end of collection year), and your income is subject to 0% tax rate, then you don't have to include this income into your Hungarian Personal Income Tax return.

If you are a foreign tax resident in addition to your Hungarian tax residency, please consult the tax authority or tax advisor of the country of your tax residency on the tax liabilities arising under your tax law.

Can I transfer my assets to another TBSZ at another service provider?

You can transfer a TBSZ in its entirety, including all assets in the account, to another provider.

This is possible even if you already have a TBSZ at the receiving service provider with the same collection year as the TBSZ you wish to transfer. In this case, the two TBSZs will merge.

How can I initiate a TBSZ transfer from IBKR to another service provider?

You can initiate the transfer of an existing TBSZ in the Client Portal where you will receive further instructions about the transfer process.

Can I transfer my TBSZ to IBKR?

Yes. You need to open a TBSZ for each year you wish to transfer, and then to complete the transfer-in request for each of them.

To open a TBSZ in Client Portal, go to Settings > Open an Additional Account > Individual Brokerage Accounts > TBSZ.

To complete a transfer-in request in Client Portal, select the TBSZ on the home screen, then go to Transfer &Pay > Transfer Funds > Transfer from Another Broker.

Note: if you do not see the Transfer from Another Broker option in Client Portal it is because it is not available for you at the moment due to the gradual rollout of the function. Please check the option later.

Can I transfer my NYESZ to IBKR?

No, you cannot transfer NYESZ to IBKR. However, you can convert your NYESZ into a TBSZ at your current service provider and instruct the service provider to transfer the TBSZ to IBKR.  The year when the NYESZ is converted to a TBSZ will be the collection year of this TBSZ.

When does the TBSZ expire or terminate?

The TBSZ terminates under the following circumstances:

• At the end of the 5-year, ergo at the end of Holding Period 2 on December 31^st, or
• If the value of the account drops below 0 HUF at any time, or
• If you submit a statement for partial withdrawal, but the value of the assets remaining in your TBSZ is below 25,000 HUF at the end of the 3-year Holding Period 1, on December 31^st, or
• If an asset is removed from the TBSZ, except at the end of Holding Period 1.

Does the TBSZ offer tax-exemption for dividends?

The TBSZ account shelters the dividend income only when it originates from Hungary. Foreign dividends do not enjoy the tax protection of the TBSZ because the foreign dividend payers may withhold foreign taxes from the payable amount. The Hungarian personal income tax will not be withheld from the dividend amount.

What are the costs and fees associated with the TBSZ?

A minimum activity fee is imposed in the TBSZ, which amounts to 2,000 HUF per month.

This fee applies collectively to all TBSZs, regardless of their number. So, whether you have 1, 3, or 5 TBSZs, the fee remains 2,000 HUF per month.

The minimum activity fee is reduced based on the total commission generated from trading in the TBSZs in each month. For example, if you have four TBSZs, and each generates commission equivalent to 300 HUF, the payable minimum activity fee would be 800 HUF (2,000 – 4 * 300 = 800).

Do I have to notify NAV about the account opening?

Yes. IBKR will provide you with a certification upon the first funding of the TBSZs. This certificate you will need to submit to NAV within 30 days from the first funding in order to enjoy the tax protection of the TBSZ.

Do I have to notify NAV about account transfers?

You have to notify NAV if you transfer your TBSZ from IBKR to another investment firm. Similarly, you should notify NAV when you transfer your TBSZ from another investment provider to IBKR. In the absence of such notification, you cannot enjoy the tax protection of the TBSZ.

The data that NAV should be notified of: the fact of transfer and the amount of the transferred assets. The timeline is within 30 days from the date of the transfer.  

Do I have any reporting obligation towards NAV?

Yes. IBKR will provide you with a tax certificate until 31 January of the following year in the case of TBSZ termination or partial withdrawal from the TBSZ. You will be required to include the amount of the taxable income as per the IBKR tax certificate in your annual Personal Income Tax return.