A draft legislation on wealth tax has been published, which would introduce a new tax liability from 2027 for individuals with net wealth exceeding one billion forints and for certain asset management arrangements, in particular trusts and private foundations.

The taxpayer

Taxable persons for wealth tax are resident and non-resident individuals, as well as resident and non-resident asset management taxpayers.

Resident taxpayers would be subject to unlimited tax liability: all of their assets in Hungary and abroad would have to be taken into account.

The draft legislation contains a separate definition for resident individuals. As a general rule, the draft also considers Hungarian citizens with dual citizenship to be resident, while certain Hungarian citizens permanently living abroad, foreign nationals working in Hungary for a specified period, and persons holding certain long-term residence rights are exempted.

By contrast, the liability of non-resident taxpayers would extend to real estate located in Hungary and the rights of pecuniary value connected to such real estate, participations held in business associations established under Hungarian law, and ownership interests held in companies possessing real estate assets in Hungary.

Tax base

The tax base of a resident taxpayer would be the difference between the calculated value of the taxable assets as at 31 December and the amount of actually existing, duly substantiated liabilities, reduced by the threshold of one billion forints. In the case of joint ownership, the asset would have to be allocated in proportion to the ownership share.

In the case of a non-resident taxpayer, however, the scope of deductible liabilities would be narrower: only duly substantiated liabilities directly related to the acquisition, creation, maintenance or value-enhancing investment of taxable Hungarian assets could be taken into account.

Determination of assets

The value of each asset would have to be determined on the basis of the specific valuation rules laid down in the draft legislation. If no specific provision applies to an asset, the fair market value as at 31 December would be decisive. As a general rule, amounts denominated in foreign currency would have to be converted into forints at the official year-end exchange rate of the Hungarian National Bank.

Corporate participations

As a general rule, the value of shares listed on a stock exchange or regularly traded off-exchange would have to be determined on the basis of the closing price on the last trading day of the year. If this differs by more than 10 percent from the volume-weighted average price of the last 30 days, the average price would apply.

For the valuation of shares in unlisted companies, the draft legislation prescribes a complex method taking several factors into account.

The draft contains a separate transitional option for the 2026 valuation of certain listed shares and debt securities.

Valuation of real estate

For real estate located in Hungary, the asset value would first have to be determined on the basis of the value of a transaction completed during the preceding 12 months. In the absence of such a transaction, the inflation-adjusted value of a transaction not older than 10 years may be taken into account. If no such data are available either, the value determined under the mass real estate valuation model of the National Tax and Customs Administration, and, as a last resort, the market value determined by an independent expert, would be applicable.

For real estate located abroad, the starting point would be the acquisition value or the value officially determined by an authority, increased by value-enhancing investments. In subsequent years, the value could be adjusted annually by 3% or on the basis of the official real estate price index of the country concerned. If this cannot be applied, an official tax or cadastral value, and, as a last resort, the market value determined by an independent expert, would serve as the basis.

Movable property

As a general rule, movable property would have to be taken into account at its year-end fair market value, while a collection would have to be valued as a unit and not as the simple sum of the individual items.

For vehicles, detailed comparison criteria would be specified by type. In the case of a motor vehicle, for example, the make, version, age, mileage, condition and equipment would have to be considered, while in the case of an aircraft or watercraft, additional technical and usage data would also have to be assessed.

Cash and crypto-assets

Cash would be included at nominal value and bank account balances at the year-end closing balance. Listed debt securities would have to be taken into account at the average price of the twenty trading days preceding the last day of the tax year, investment units at the net asset value applicable on the last day of the tax year, and untraded bonds, as a general rule, at nominal value.

The value of crypto-assets would have to be determined as the product of the year-end quantity and the publicly available closing price on the last day of the tax year quoted by a platform providing regular trading.

Assessment and payment of the tax

According to the draft legislation, the legislation would enter into force on 15 December 2026; however, when determining the first tax liability, the wealth held on 31 December 2026 would already have to be taken into account.

Wealth tax would operate on the basis of self-assessment. Accordingly, as a general rule, the deadline for the first wealth tax return and tax payment is expected to be 31 August 2027.

Tax rate

The draft would apply progressive tax rates. A rate of 1 per cent would apply to the portion of the tax base exceeding HUF 1 billion but not exceeding HUF 100 billion, while a rate of 1.5 per cent would apply to the portion exceeding that amount.

Data provision and notification obligation

Resident business associations whose equity exceeds HUF 500 million according to their financial statements for the last closed financial year would have to provide data to the persons exercising ownership rights and to the tax authority within 30 days following the approval of the financial statements. The data provision would have to include the data necessary to determine hidden reserves, including the difference between the market value and the book value of real estate, corporate participations and securities recognised as non-current assets in the balance sheet.

In the case of business associations with a registered office abroad, the data provided by the company to its owners could also be considered for the purpose of determining the required data.

Existing resident asset management taxpayers and the affected non-resident asset management taxpayers would have to submit a notification to the tax authority within 30 days of the entry into force of the legislation

To enable you to quickly assess whether the proposed wealth tax may affect you, we have prepared a short questionnaire which, based on the main criteria, helps determine whether you are expected to fall within the scope of the legislation. The questionnaire is available at the following link: Vagyonadó kérdőív.

If you have any questions regarding the draft, the determination of residence, the valuation of wealth or any potential tax liability, our experts are at your disposal. Please feel free to contact us for personalised advice.