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Law restricts, but does not prohibit, passing on transactions duty

Hungarian law restricts, but does not prohibit, lenders from making unilateral changes to contracts that are unfavourable to clients, financial market regulator PSZÁF said on Tuesday.

PSZÁF issued the statement in response to a number of inquiries regarding the possibility that banks will pass on the cost of a financial transactions duty to clients next year. PSZÁF said lenders may make unilateral changes to contracts that are unfavourable to clients only if the changes are based on formulas stated in the contract for calculating fees and costs, and if no new fees or costs are introduced. In addition to these legal restrictions, competition will also limit the degree to which lenders pass on the cost of the financial transactions duty, PSZÁF added. If Parliament approves amendments to legislation on the duty, most financial transactions will be taxed at a rate of 0.2% from 2013.