Exit Tax Hungary 2027: New Rules for Individuals Moving Abroad

Hungary is proposing the introduction of a new exit tax for individuals from 1 January 2027 (exit tax Hungary). The new rules would apply to certain individuals who cease to be Hungarian tax residents while holding significant financial assets and, as a result of the change of residence, Hungary loses or sees its taxing rights restricted in respect of the future disposal of those assets.

The proposal is particularly relevant for high-net-worth individuals, business owners, founders and investors considering a move from Hungary. It should also be viewed in the context of the broader changes affecting the taxation of private wealth in Hungary. Although the legislation does not expressly state that the exit tax is linked to the proposed wealth tax, its stated objective is to prevent undesirable transfers of wealth abroad that reduce Hungary’s future taxing rights. Against the background of the separate wealth tax proposal, the new exit tax could therefore materially limit the effectiveness of relocating financial assets or changing tax residence as part of wealth tax planning.

Who could be subject to exit tax Hungary?

The proposed exit tax Hungary would not apply to every individual leaving Hungary.

Under the draft rules, an exit tax liability could arise where all of the following conditions are satisfied:

• the individual was a Hungarian tax resident for at least five of the ten tax years preceding the termination of Hungarian tax residence;
• the combined fair market value of the relevant assets exceeds HUF 500 million, or the individual owns at least a 20% interest in a company with a fair market value of at least HUF 250 million; and
• as a consequence of the change in tax residence, Hungary’s right to tax the subsequent disposal or other realization of the relevant asset ceases or becomes restricted.

The last condition is particularly important. A change of residence would therefore not automatically result in exit taxation. It would also be necessary to establish how Hungary’s taxing rights are affected by the move.

This makes the interaction between Hungarian domestic rules and the relevant double tax treaty an important part of the analysis.

Which assets could be subject to Hungarian exit tax?

The proposed rules focus primarily on financial and investment assets. Relevant assets would include, among others:

• shares and other securities;
• interests in Hungarian and foreign companies or other entities;
• certain options, subscription and conversion rights and derivative positions related to such investments;
• certain deferred or contingent consideration relating to the disposal of corporate interests;
• crypto-assets;
• the entire portfolio held under a Hungarian Long-Term Investment Account (TBSZ);
• claims held on a Retirement Savings Account (NYESZ); and
• surrender and other residual rights connected with life insurance and pension insurance contracts.

Cash, ordinary payment accounts and bank deposits would generally not constitute separate exit-tax assets.

Real estate is also notably absent from the statutory list of exit-tax assets. The proposed exit tax Hungary therefore differs fundamentally from the proposed Hungarian wealth tax, which has a significantly broader asset base.

How would exit tax be calculated?

The underlying concept is similar to a deemed disposal immediately before Hungarian tax residence terminates.

The individual would generally need to determine the fair market value of each relevant asset on the day preceding the termination of Hungarian tax residence and calculate the gain under the income determination rules that would otherwise apply to an actual disposal or realization of that asset.

For example, if shares:

• originally cost HUF 100 million; and
• have a fair market value of HUF 300 million immediately before the change of residence,

the unrealized appreciation would, in a simplified case, amount to HUF 200 million.

The proposed exit tax seeks to bring the appreciation accumulated while the individual was within the Hungarian tax system into taxation even though the asset has not actually been sold.

Documentation will therefore be critical. The individual is responsible for substantiating acquisition costs and other deductible costs. Amounts that cannot be properly substantiated cannot be taken into account when determining the exit-tax income (exit tax Hungary).

Losses on other assets may not reduce the exit-tax base

An important and potentially severe feature of the proposal is that the calculation is performed separately for individual assets.

Positive unrealized gains are aggregated, but a zero or negative difference calculated for another asset cannot reduce the positive gain arising on another exit-tax asset.

For example:

• Asset A: HUF 100 million unrealized gain
• Asset B: HUF 60 million unrealized loss
• Asset C: HUF 200 million unrealized gain

The proposed rules would result in HUF 300 million of exit-tax income rather than a net HUF 240 million gain.

For diversified investment portfolios, this could make the outcome materially different from a conventional portfolio-level capital gains calculation (exit tax Hungary).

Special exit tax treatment for long-term investment accounts

The treatment of long-term investment accounts deserves particular attention.

For exit tax purposes, the relevant gain would broadly be determined as though the TBSZ arrangement had been interrupted immediately before the individual ceased to be Hungarian resident.

Importantly, this deemed calculation would not itself terminate the long-term investment account.

However, the preferential tax rates otherwise associated with the long-term investment accounts would not apply when calculating the exit-tax liability. A subsequent maturity, renewal or other preferential taxation of the long-term investment account would not automatically change the exit-tax amount established at the time of the change in residence.

Special, broadly comparable rules are also proposed for pension accounts and certain life and pension insurance arrangements.

Moving to another EU or EEA country

There is an important distinction between moving to an EU/EEA country and moving elsewhere.

Where tax residence is transferred to another EU or EEA state, the exit-tax liability would still have to be calculated and reported, but payment would generally benefit from an automatic, interest-free deferral.

No separate application would be required, provided that the exit-tax income and the related tax are reported on time together with the required asset-by-asset information.

Importantly, this is not simply a short-term instalment arrangement. The payment deferral may remain in place without a fixed time limit until an event occurs that terminates the deferral.

Such events could include:

• disposal or other realization of the relevant asset;
• a transfer of the asset without consideration;
• certain substantial distributions or withdrawals of value from a corporate interest;
• a subsequent change of tax residence to a country outside the EU/EEA; or
• failure to comply with the prescribed reporting obligations even after a request from the Hungarian tax authority.

Individuals benefiting from the deferral would also have an annual reporting obligation regarding their current residence, tax residence and continued ownership of the relevant assets (exit tax Hungary).

Moving to a non-EU/EEA country

The position could be significantly less favorable where an individual becomes resident in a country outside the EU/EEA.

Under the proposed statutory wording, the automatic interest-free payment deferral is available for moves to EU and EEA states. For other destinations, the exit tax would generally have to be paid by the deadline applicable to the individual’s annual Hungarian personal income tax return.

This distinction could become an important consideration when planning the timing and destination of an international relocation.

What happens if the asset subsequently falls in value?

The proposal contains an important relieving mechanism for deferred exit tax.

Where an asset is subsequently realized at a value below the fair market value used for the original exit-tax calculation, the tax may be recalculated to reflect the subsequent decrease in value.

However, the reduction can only be taken into account to the extent that the new country of residence has not taken, and will not take, the same reduction into account in determining taxable income or loss relating to the asset.

The provision therefore seeks to avoid both excessive taxation and double use of the same loss.

Returning to Hungary could cancel the deferred exit tax

A particularly significant provision concerns individuals who subsequently return to Hungary.

If an individual benefiting from the EU/EEA payment deferral becomes Hungarian tax resident again before the relevant asset is realized, and the asset remains in the individual’s ownership, the deferred exit tax attributable to that asset would cease to exist.

The proposal contains another unusual provision: deferred tax that has not become payable by the time of the individual’s death would also cease.

These rules of exit tax Hungary could become highly relevant in temporary international relocation cases.

Trusts, fiduciary asset management and private foundations

The proposal also contains specific rules designed to deal with wealth previously transferred into fiduciary asset management arrangements, private foundations and comparable wealth-holding structures.

Where the individual ceasing Hungarian residence is a settlor, founder or contributor, the exit-tax calculation may extend to the portion of the structure’s assets attributable to that individual.

The calculation can include:

• previously untaxed increases in asset value;
• further unrealized appreciation of individual underlying assets; and
• accumulated returns that have not previously been taxed at the level of the individual.

Where there are several settlors, founders or contributors, the relevant wealth must be allocated between them, primarily on the basis of the records maintained by the asset manager or foundation.

For high-net-worth families using Hungarian or international wealth-holding structures, this could make the exit-tax analysis considerably more complex than simply reviewing assets held directly by the individual.

Exit tax and the proposed Hungarian wealth tax

The timing of the exit-tax Hungary proposal is particularly noteworthy given the separate proposal to introduce a Hungarian wealth tax.

The two taxes operate on fundamentally different principles. The proposed wealth tax would be an annual tax based on taxable net wealth, whereas the exit tax targets accumulated but unrealized income when Hungary loses or sees its future taxing rights restricted following a change in tax residence.

Nevertheless, the two proposals need to be considered together when advising internationally mobile high-net-worth individuals.

The explanatory memorandum to the exit-tax proposal expressly states that the objective of the measure is to restrict undesirable transfers of wealth abroad that reduce Hungarian taxing rights. In practice, the exit tax may therefore become an important constraint on strategies involving a change of residence or the relocation of investment wealth abroad. However, where a change of residence is contemplated as part of wider wealth planning, both regimes may need to be analyzed before the relocation takes place.

Why tax residence and treaty analysis will be critical

The exit-tax rules make the precise date and legal consequences of a change in tax residence especially important.

The relevant questions will not simply be: when did the individual physically leave Hungary?

Instead, the analysis may need to determine:

1. when Hungarian tax residence terminates under domestic law;
2. whether a double tax treaty applies;
3. where the individual is resident under that treaty;
4. whether the change affects Hungary’s future right to tax the particular asset;
5. whether the applicable asset and ownership thresholds are met; and
6. whether payment deferral is available.

For individuals with substantial international assets, dual residence situations, foreign companies, long-term investment portfolios or wealth-management structures, these questions may require detailed individual analysis.

When would the Hungarian exit tax take effect?

Under the bill currently submitted to the Hungarian Parliament (exit tax Hungary), the new exit-tax provisions are scheduled to enter into force on 1 January 2027.

This effective date may be particularly important for individuals who leave Hungary during 2026.

The proposed exit tax Hungary is triggered by the termination of Hungarian tax residence. The deemed realization of the relevant assets is linked to the day preceding the termination of residence. Accordingly, based on the current wording of the bill, an individual whose Hungarian tax residence has already effectively terminated before 1 January 2027 should generally fall outside the new exit-tax regime, even if that individual had previously been Hungarian tax resident for at least five of the preceding ten tax years (exit tax Hungary).

The five-out-of-ten-year residence test should therefore be understood as a look-back condition rather than a rule that retrospectively subjects earlier departures to exit tax Hungary. For example, if an individual ceases to be Hungarian tax resident in March 2027, residence during earlier years, including years before the introduction of the exit tax Hungary, may be relevant when determining whether the five-year threshold has been met (exit tax Hungary).

By contrast, if the individual’s Hungarian tax residence already terminated in December 2026, the relevant residence-change event and the associated deemed realization would have occurred before the proposed rules enter into force.

Importantly, the date of physical departure from Hungary is not necessarily the decisive date. An individual may move abroad during 2026 but remain Hungarian tax resident until a later date. The actual termination of Hungarian tax residence may require an analysis of Hungarian domestic residence rules and, where relevant, the applicable double tax treaty (exit tax Hungary).

This creates an important transitional issue for internationally mobile individuals around the end of 2026. Establishing and documenting the precise date on which Hungarian tax residence terminates may therefore have a direct impact on whether the new exit-tax regime applies at all.

Accordingly, individuals with significant investments, private company interests, long-term investment portfolios, crypto-assets or wealth-management structures who have already moved, or are considering moving, abroad should distinguish carefully between the date of relocation and the date on which Hungarian tax residence legally terminates (exit tax Hungary).

Practical implications for private clients

For high-net-worth individuals considering a move from Hungary, the introduction of exit tax Hungary means that tax planning should ideally take place before the tax residence change occurs.

The review should generally cover:

• historic Hungarian tax residence;
• the destination country and applicable double tax treaty;
• shares and privately held business interests;
• investment portfolios;
• crypto-assets;
• long-term investment and pension accounts;
• life and pension insurance arrangements;
• fiduciary asset management and private foundation structures;
• acquisition costs and supporting documentation; and
• the availability of EU/EEA payment deferral.

In many cases, determining whether exit tax applies at all may be just as important as calculating the tax itself.

Important disclaimer

This article is based on Bill T/927 submitted to the Hungarian Parliament on 27 October 2026 and reflects the proposed legislation available at the date of writing (exit tax Hungary). The bill has not yet been enacted and may be amended during the legislative process. This article is intended for general information only and does not constitute tax, legal or investment advice. The application of the proposed exit-tax rules depends on the individual’s residence history, assets, ownership structure, destination country and applicable tax treaty and should therefore be assessed on a case-by-case basis.