Substantial personal wealth does not necessarily mean readily available funds. Hungary’s proposed new wealth tax therefore raises important questions for those whose assets are held in businesses, real estate or investments. Moving abroad would not necessarily, in itself, eliminate Hungarian tax liabilities.
What does the new wealth tax proposal contain?
Under the bill as submitted, the tax base would be the portion of assessed wealth exceeding HUF 1 billion, after deducting eligible liabilities. The first HUF 100 billion of that tax base would be taxed at 1%, with any excess taxed at 1.5%. The initial liability would be assessed by reference to assets and liabilities as at 31 December 2026; the proposed filing and payment deadline is 31 August 2027.
The details could determine the actual tax burden
The value of interests in companies would not necessarily equal their book value. A business’s earnings capacity, the aggregation of family members’ interests and the availability of valuation reliefs could also be relevant. Proper documentation of real estate, investments and associated liabilities could therefore be crucial in determining the tax base.
An overseas address is no substitute for a full assessment
Tax residence depends on more than the number of days spent abroad: actual living arrangements, family and economic ties, and the applicable tax treaty also matter. Under the exit tax plans described, a change in tax residence could also trigger tax on unrealised gains on certain financial assets. The availability and conditions of any payment deferral would therefore require separate examination.
Do you hold substantial assets or plan to move abroad? Contact our firm to discuss the legal implications of your financial circumstances and proposed steps. Reviewing your individual circumstances can help ensure that your decision is not based solely on assumed tax advantages.
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