Proposed Wealth Tax in Hungary: What You Need to Know

Important: the following summary is based on the draft legislation and explanatory memorandum on the introduction of wealth tax in Hungary released for public consultation. The proposal has not yet been enacted or submitted to the National Assembly, and the rules may therefore change substantially during the legislative process.

Who Would Be Liable for Wealth Tax in Hungary?

Under the proposal, the first step for wealth tax in Hungary would always be to determine the taxpayer’s residence for wealth-tax purposes. This would establish whether the individual’s worldwide assets, or only specified assets connected with Hungary, fell within the scope of the tax.

Domestically resident individuals

Domestically resident individuals would be subject to unlimited tax liability of wealth tax in Hungary. This means that, when determining the wealth-tax base, they would have to take account not only of assets located in Hungary but also of assets situated abroad.

In principle, the tax base could therefore include:

• a flat in Budapest;
• a residential property in Vienna or London;
• a US share portfolio;
• a Swiss bank account;
• or even an interest in a foreign company.

Non-resident individuals

By contrast, non-resident individuals would be subject only to limited tax liability of wealth tax in Hungary. For them, only certain assets with a Hungarian connection would fall within the scope of the wealth tax.

These would include, in particular:

• real property in Hungary;
• rights of monetary value over Hungarian real property;
• an interest in a Hungarian company;
• an interest in a company holding real estate in Hungary.

Accordingly, a non-resident individual’s foreign real estate would, as a general rule, not form part of the Hungarian wealth-tax base.

Strict residence rules for Hungarian citizens

One of the proposal’s most notable, and potentially most contentious elements is the definition of residence of wealth tax in Hungary.

While many foreign nationals could, in certain circumstances, remain outside the wealth tax regime (wealth tax in Hungary) for several years, the proposal would impose considerably stricter rules on Hungarian citizens.

It is particularly noteworthy that dual nationals are expressly addressed. Under the current wording, the mere fact that an individual is a citizen of Hungary and another state and lives abroad would not necessarily be sufficient to establish non-residence for wealth-tax purposes.

Under the proposal, a Hungarian citizen would automatically cease to be domestically resident only after living habitually abroad for at least ten years.

This could be especially significant for dual nationals who moved abroad within the past few years and currently hold all their assets outside Hungary.

Residence for wealth-tax purposes is not the same as personal income tax residence

A crucial feature of the proposal of wealth tax in Hungary is that the residence rules applicable for wealth-tax purposes would not always coincide with those under the Personal Income Tax Act (the PIT Act).

This may be particularly important for individuals who have moved abroad, hold dual nationality or habitually divide their time between several countries.

Under the current proposal of wealth tax in Hungary, an individual could:

• no longer be regarded as Hungarian tax-resident for personal income tax purposes;
• while still being treated as domestically resident for wealth-tax purposes.

This could arise particularly because of the special rules applying to Hungarian citizens and dual nationals. In certain cases, the proposal would link residence for wealth-tax purposes to continued Hungarian citizenship and the length of time spent abroad.

Double tax treaties could play a decisive role

The proposal of wealth tax in Hungary also states that, where a treaty between Hungary and another state extends to taxes on wealth, the treaty provisions may take precedence over domestic law.

In practice, this could mean that, for a person who:

• is a Hungarian citizen or dual national;
• lives abroad;
• and is tax-resident in a treaty jurisdiction;

the wealth-tax analysis would not end with the wording of legislation of wealth tax in Hungary. The relevant treaty with the other state would also need to be examined.

In some cases, treaty provisions could make it easier for the individual to establish foreign residence or exemption from Hungarian taxation for certain foreign assets.

Residence is likely to be one of the most important planning issues

Under the proposal of wealth tax in Hungary, the primary question may not be where a property or investment is geographically located, but whether the individual is domestically resident or non-resident under the wealth-tax rules and any applicable international treaty.

Determining this may require a detailed factual and treaty analysis, particularly for:

• dual nationals;
• Hungarian citizens who have moved abroad;
• foreign executives and expatriates working in Hungary;
• individuals owning property or investments in several countries;
• beneficiaries of international wealth-management structures.

If wealth tax in Hungary is introduced, determining residence is therefore likely to be as important as valuing the assets themselves. In many cases, analysis of residence and applicable international treaties will determine whether a particular foreign property, investment or company interest enters the Hungarian wealth-tax base at all.

Favourable rule for foreign employees assigned to Hungary

A lesser-known but highly important provision is that certain foreign employees arriving in Hungary would not be regarded as domestically resident for wealth-tax purposes, even if they otherwise live and work in Hungary habitually.

The rule of wealth tax in Hungary would apply to non-Hungarian nationals employed in Hungary by a foreign employer under an assignment, secondment or temporary agency arrangement. They would not become domestically resident under the wealth-tax rules for five years from the start of their work in Hungary.

The significance of this is difficult to overstate. While the proposal of wealth tax in Hungary would apply particularly strict residence rules to Hungarian citizens, including dual nationals, a US, British, German or other foreign executive, specialist or manager arriving in Hungary could remain outside the scope of unlimited Hungarian wealth-tax liability for up to five years.

In practice, this could mean that the foreign property, investment portfolio and other overseas assets of an executive assigned to Hungary would generally remain outside the Hungarian wealth-tax base because the individual would not become a domestically resident taxpayer under the proposal of wealth tax in Hungary.

This rule may be especially relevant to senior executives and specialists at multinational companies who hold substantial assets abroad. Under the current proposal, an expatriate who has lived in Hungary for several years could be in a more favourable wealth-tax position than a Hungarian citizen of comparable means who moved abroad only a few years ago.

Naturally, the rule’s application may require a detailed factual review in every case, particularly in relation to the legal basis of the employment, the identity of the employer and any applicable international treaties.

This provision of wealth tax in Hungary suggests that the legislature intends to give conventional international mobility arrangements a form of ‘settling-in period’, rather than immediately bringing the worldwide assets of foreign employees arriving in Hungary within the Hungarian wealth-tax regime.

Trust asset management and private foundations would not remain outside the regime

The proposal would not apply only to individuals. Separate taxpayers for wealth-tax purposes would include:

• assets held under Hungarian trust asset-management arrangements;
• private foundations;
• and certain trusts and other foreign wealth-management structures.

The clear aim is to prevent substantial wealth from escaping taxation merely because it is transferred into a wealth-management structure.

It is also noteworthy that the proposal contains specific rules for connected wealth-management structures and restricts repeated use of the HUF 1 billion threshold.

Assets of minor children: practical difficulties may arise

As a general rule of wealth tax in Hungary, the assets of a minor child would be included in the tax base of the parent or parents, subject to certain exceptions, including inherited assets and assets acquired from the child’s own earnings.

This could create interesting issues for many international families. For example, questions may arise where:

• one parent is a Hungarian citizen and domestically resident for wealth-tax purposes;
• the other parent is a foreign national and non-resident;
• and the child owns substantial assets.

In such cases, the tax treatment of the minor child’s assets could raise significant practical and documentation issues. The current wording is likely to require further interpretation on several points of detail.

Which Assets Could Be Affected by Wealth Tax in Hungary?

The proposal of wealth tax in Hungary defines the range of assets extremely broadly. The tax base could include, among other things:

• real estates;
• interests in companies;
• shares;
• investment funds;
• bank deposits;
• cash;
• bonds;
• cryptoassets;
• investment precious metals;
• the surrender value of certain insurance policies;
• high-value works of art;
• jewellery;
• collections;
• vehicles.

Valuation is at least as important as the asset itself

One of the proposal’s most complex elements is its valuation framework. The legislature has evidently sought to capture the economic value of assets rather than relying solely on registered or book values.

Real estate

For real estate, the system would primarily start from a previous transaction value, supplemented by various indexation, revaluation and value-adjustment rules. In certain cases, the mass appraisal model used by NAV, the Hungarian tax authority, or a value determined by an independent valuer could also be used.

For foreign real estate, the system would generally begin with acquisition cost, adjusted over time under various revaluation rules.

Interests in companies

The valuation of unlisted companies could be particularly significant.

The proposal ofmwealth tax in Hungary would take account not only of equity but also of the business’s earnings capacity. As a result, the value of a profitable family business for wealth-tax purposes could substantially exceed the book value familiar to its owner.

Hidden reserves would have a specific role, as would valuations prepared by independent business valuers in certain cases.

Financial assets

For bank deposits, listed securities, investment funds, cryptoassets and other financial instruments, the rules would generally rely on objective market or year-end values.

The principal practical lesson: documentation will be critical

Although the proposal is lengthy and technically complex, its underlying logic appears relatively consistent. Residence, the scope of assets and valuation methods are generally built around clear principles.

For that reason, in practice the key issue is likely to be not merely the existence of wealth, but the ability to substantiate it properly.

Particular importance may attach to:

• documents supporting residence;
• evidence of habitual life abroad;
• property valuation documentation;
• calculations supporting the value of company interests;
• records of foreign assets;
• documentation for wealth-management structures;
• and any documents supporting an exemption, limited tax liability or more favourable valuation.

Under the current proposal, both the amount of wealth and the quality of the supporting documentation are therefore likely to be decisive in a future wealth-tax return or tax authority audit.

When Would Wealth Tax in Hungary Take Effect?

Under the current proposal, the wealth tax would take effect exceptionally quickly: the planned commencement date is 15 December 2026, while the first tax liability would relate to the asset position as at 31 December 2026.

This means that the legislature would not apply the new tax only from a future tax year; instead, liability could arise by reference to the assets held on the final day of the year in which the legislation takes effect. The proposal also contains transitional rules for the first year of application, 2026, further indicating that the legislature regards the asset position on 31 December 2026 as the first relevant reference point.

In practice, the timetable would be:

• 15 December 2026 – planned commencement of the legislation;
• 31 December 2026 – first asset position assessed;
• 31 August 2027 – first filing and payment deadline.

It is particularly noteworthy that taxpayers would determine asset values as at 31 December 2026, while the return and payment would not be due until approximately eight months later.

What should be considered now?

Because the rules generally link valuation to the year-end position, ownership, residence and wealth-management structures in place on 31 December 2026 could be decisive. This is particularly relevant to:

• Hungarian citizens who have moved, or plan to move, abroad;
• dual nationals;
• owners of substantial family businesses;
• trust asset-management or private-foundation structures;
• individuals with substantial foreign property and investment assets.

Wealth Tax in Hungary: Which Transactions Could NAV Scrutinise?

One of the proposal’s most important, and perhaps most surprising, elements is that the anti-avoidance rules associated with wealth tax in Hungary would not apply only after the legislation took effect. According to the explanatory memorandum, the tax authority could examine compliance with the requirement to exercise rights in accordance with their purpose from the point at which the intention to introduce the wealth tax became public knowledge, namely following publication of the government resolution on 14 May 2026.

This would not, of course, mean that transactions carried out after that date were automatically open to challenge. The proposal would, however, enable the tax authority to examine the economic or family reasons underlying certain substantial reallocations of wealth.

Under the current wording, particular attention could be given to, for example:

• gifts of substantial assets to children or other family members;
• intra-family transfers of high-value property;
• reallocations of interests in family businesses;
• the establishment of new trust asset-management structures or private foundations;
• transfers of assets between wealth-management structures;
• contributions of Hungarian real property to foreign holding or wealth-management structures;
• transactions resulting in wealth being divided among several persons or structures.

The explanatory memorandum nevertheless emphasises that, when assessing whether rights have been exercised in accordance with their purpose, the authority must also consider whether genuine economic, commercial, wealth-planning or family reasons supported the transaction. Where such reasons can be substantiated, the fact that a transaction produces a more favourable wealth-tax outcome would not, by itself, make it objectionable.

Property transactions also deserve particular attention. The proposal would allow the tax authority to challenge the transaction value used if it could prove that the parties set it below market value specifically for tax-avoidance purposes. In that event, NAV, the Hungarian tax authority, could use the market value it determines, potentially resulting in a tax shortfall and related legal consequences.

The principal practical message is therefore not necessarily that wealth reallocations carried out in 2026 would be problematic, but that their economic and family rationale, and the values applied, should be supported by appropriate documentation. Under the proposal, this is likely to be one of the most important considerations in any future wealth-tax audit.

If wealth tax in Hungary is introduced, rapid restructurings that are often difficult to substantiate are therefore unlikely to be the primary solution. Instead, careful analysis of residence, asset classification, applicable international treaties and valuation rules will be essential. In many cases, deciding whether a particular asset falls within the scope of the Hungarian wealth tax at all, or whether an individual is domestically resident or non-resident for wealth-tax purposes, may itself be a complex professional question. Under the proposal, sound legal interpretation and documentation may therefore become at least as important as the wealth structure itself.

Finally, it is important to emphasise that the proposal remains subject only to public consultation. The commencement date, the rules for the first year of application, and the valuation and residence provisions may all change during the parliamentary legislative process.