Non-residents are taxed in Hungary on income arising from Hungarian sources only. You are considered tax resident in Hungary if you spend at least 183 days there per year or if your main resident home is located in Hungary. Tax on purchase: Hungarian Transfer Tax : The transfer of property which is used as a dwelling is subject to stamp duty ranging from 2%-6% depending on value. 2% is applied to the first HUF 4,000,000, 6% thereafter. It is payable by the purchaser. Hungarian VAT is charged on newly build property at 20% or if the seller elects to be vatable. VAT is generally not levied on rents unless the landlord is in the business of letting accomodation or elects to be vatable. Ongoing property taxes: Hungarian Income Tax : Non-resident property owners must pay income tax on any rental income arising from the letting of a Hungarian property. The rental income received during the year is taxed at a flat 25% of the rents received.
Annual Taxable Income Tax rate on excess Tax paid on 306,000 An annual return must be submitted before 20th May following the relevant tax year end. Hungarian Corporate Income Tax is payable if a property is purchased through a Hungarian company. Net profits after allowable costs are taxed at 16% plus a 4% solidarity tax. Capital gains earned in a company are taxed as company income ie 16%. Local Property Tax are also payable and vary per location. The average cost per annum is €3.95 per sq/m for building property. Transfer taxes: For taxable gains, the Hungarian CGT tax rate is 25%. The rules relating to re-investment changed from 1 Jan 2008. Hungarian Inheritance Tax : The amount of inheritance tax due depends the value of the property transferred and the relationship between the individuals that are party to the inheritance. The inheritance is taxed progressively (from 2.5% - 21%) in accordance with the table below : If you are resident in Ireland or the UK, you will be obliged to declare and file your Hungarian income in Ireland/ UK also. There is a double taxation agreement between the Hungary and Ireland / the UK so relief for certain Hungarian taxes will be given against Irish/ UK taxes payable on your Hungarian income.
You will also be obliged to file a tax return detailing your worldwide income in your home (tax resident) country.
Where a double taxation agreement exists between Hungarian and your home country, which provides for double taxation relief, then a deduction for tax paid in the foreign country can be offset against tax on the same income in your home country.
The purchase of shares in Hungary is not subject to stamp duty.
It is possible for certain taxpayers to elect to treat rental income as income from independent services. Such an election would be valid for 4 years. Where an election is made the taxable income is calculated as the gross income received less deductible expenses. The deductible expenses may be calculated as a flat 10% of the gross income or alternatively as the actual expenses incurred. Net income is then taxed at rates (2009) varying from 18%-36% depending on value.
(HUF)
(%)
previous band (s)
0—1,700,000
18
-
1,700,001 and over
36
Withholding Tax on Rents: The tax due on rental income paid to non-residents must be withheld by the paying agent or tenant. If no tax is withheld from rents, the non-resident is required to file a tax return and pay the tax within 30 days of receiving the income.
Hungarian Capital Gains Tax : For residential property, if the property is sold after 5 years, reduced rates of Hungarian CGT apply ie 10% reduction per annum after year 5. No Hungarian CGT applies if sold after year 15. Irish CGT still applies at 20%.
Taxable Inheritance HUF (€)
1
2
3
Up to 18,000,000 (€72,399) 2.5%
6%
8%
18,000,000 - 35,000,000 (€140,777)
6%
8%
12%
Exceeding 35,000,000 (€140,777) 11%
15%
21%
1. Children, Spouse, Parents ; 2. Other close relatives ; 3. Non-Relatives