Hungary Wealth Tax 2027: Who Could Be Affected and How Should Businesses Prepare?
Hungary is considering introducing a wealth tax on taxable net assets exceeding HUF 1 billion. Under the current draft legislation, the first valuation date could be 31 December 2026, with the first tax return and payment due by 31 August 2027. The proposal could affect high-net-worth individuals, company owners and certain wealth management structures. However, the legislation has not yet been adopted, and its final provisions may change.
Who Could Be Affected by Hungary’s Proposed Wealth Tax in 2027?
Under the draft legislation, the proposed tax would apply to individuals and certain wealth management entities whose taxable net wealth exceeds HUF 1 billion.
Hungarian tax residents would generally be subject to the proposed rules on their assets located both in Hungary and abroad. For non-residents, the rules would primarily cover assets connected to Hungary.
The taxable asset base could include real estate, shares in companies, investments, bank balances and other assets. Certain properly documented liabilities could be deducted when calculating taxable net wealth, subject to the conditions set out in the draft legislation.
The proposal also addresses wealth management structures, including certain private foundations, and aims to prevent taxpayers from avoiding the threshold by dividing assets among multiple structures.
What Would the Proposed Tax Rates Be?
The draft provides for two tax rates:
1% on the taxable amount exceeding HUF 1 billion, up to HUF 100 billion.
1.5% on the portion exceeding HUF 100 billion.
The higher rate would apply only to the amount above HUF 100 billion, rather than replacing the lower rate on the entire taxable amount.
How Would Real Estate and Company Shares Be Valued?
The valuation rules could be one of the most important aspects of the proposed tax, particularly for property owners and business shareholders.
Real estate: The draft establishes an order of valuation methods. The starting point would generally be a recent transaction value. Where this is unavailable, an indexed historical value, the Hungarian tax authority’s nationwide mass property valuation model or, ultimately, an independent professional valuation could be relevant. Foreign real estate owned by Hungarian tax residents could also fall within the scope of the tax, subject to specific valuation rules.
Listed shares: Market prices would generally determine the value of listed or regularly traded company shares.
Shares in unlisted companies: A more complex calculation is proposed. One-third of the calculated value would reflect the company’s equity, while two-thirds would reflect its income-generating capacity. The yield value would generally be calculated using the average after-tax profit of the last three completed financial years and a 15% capitalisation rate.
For companies with equity exceeding HUF 500 million, hidden reserves could also be relevant. These may arise, for example, where the market value of real estate or securities exceeds their carrying value in the accounts.
Consequently, the value of a shareholding for wealth tax purposes could differ significantly from the equity reported in a company’s financial statements. Separate valuation rules are also proposed for certain holding companies.
Which Other Assets Could Be Included?
In addition to property and company shares, the proposed rules could cover bank balances, investments, receivables, crypto-assets and other financial or personal assets.
Everyday personal belongings would generally be excluded, but certain high-value items could be taxable. The draft, for example, refers to individual works of art, collections and jewellery worth more than HUF 3 million, as well as vehicles worth more than HUF 10 million.
Family asset ownership would also require careful consideration. Spouses’ assets would generally be assessed separately, taking account of any matrimonial property agreement. In certain circumstances, assets could be allocated equally between spouses if there is no properly documented division. Some assets owned by minor children could be attributed to a parent’s tax base, while inherited assets and assets acquired through the child’s own earnings would be subject to separate rules.
The proposal also includes a special five-year rule for certain foreign employees working in Hungary for foreign employers. This would not constitute a blanket exemption, as Hungarian real estate and other Hungary-connected assets could remain relevant.
What Would Companies Need to Consider?
Although the proposed tax primarily concerns individuals and certain wealth management entities, it could also create additional work for companies.
For companies with equity exceeding HUF 500 million, identifying hidden reserves and preparing the relevant valuation information could become particularly important. The draft also envisages reporting obligations relating to this information, including communication to shareholders and the Hungarian tax authority.
Company owners should therefore not rely solely on the equity figure in the latest annual accounts. Depending on the final legislation, additional information about company assets, their market values and the calculated value of shareholdings may be required.
When Would the Tax Return and Payment Be Due?
Under the current proposal, taxable wealth would generally be assessed as of 31 December each year. The tax return and payment would be due by 31 August of the following year.
The draft envisages an effective date of 15 December 2026. If this timetable remains unchanged, the first valuation date would be 31 December 2026, with the first return and payment due by 31 August 2027.
Taxpayers experiencing payment difficulties could apply to the Hungarian tax authority for a payment extension or instalments. The proposed period would generally be up to 12 months and, in exceptional cases, up to 24 months.
How Should Individuals and Businesses Prepare?
Individuals with substantial property holdings, company shareholders and those involved in wealth management structures should consider reviewing:
Which assets could fall within the scope of the proposed tax.
How real estate and company shareholdings might need to be valued.
Which liabilities could be deducted and what evidence would be required.
Whether the necessary accounting, ownership and valuation information is available.
The key point is that calculating potential wealth tax liability could require detailed valuation work and supporting documentation. It may be sensible to assess potential exposure early, while avoiding irreversible decisions based solely on draft legislation.
Pro Optimum Solutions provides accounting and tax advisory services in Hungary. We can help businesses review relevant accounting and ownership information and prepare the data needed to assess potential tax implications.
This article is for general information purposes only and does not constitute individual tax advice.
