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Capital: Budapest
Official Language: Hungarian
Hungarian Intellectual Property Office (HIPO) Copyright Department
Mr. Viktor Luszcz
President/Président
Mr. Péter Lábody
Head of the Copyright Department/Chef du département du droit d’auteur
Email: [email protected]
[email protected]
Telephone: (36 1) 312 4400 Central
(36 1) 474 5961 Copyright
Website: http://www.hipo.gov.hu
http://www.hipo.gov.hu/en/copyright-and-related-rights
Address: II. János Pál pápa tér 7 H-1081 Budapest
Mailing address: PO Box 415 1438 Budapest
Individuals are taxed at 25 percent on income from the sale of property in Hungary, unless a double tax treaty provides otherwise. So, if you bought a flat for HUF20 million ($86,470) and now sell it for HUF24 million ($103,800), you will have to pay a quarter of the HUF4 million ($17,300) profit to the tax authorities. The documented costs of acquiring and developing the property allowed by Hungarian law may be deducted on income from the sale. It may also be possible to deduct the costs of travel and service fees that are associated with the property as part of your global income. Consulting a tax advisor in the country where you pay taxes is advisable. Hungary has long-standing double taxation treaties with most countries making this situation fairly straightforward.
There is no annual amortization on the property and the level of tax payable starts to depreciate at 10 percent per year only from the sixth year of ownership onwards. Tax can be reclaimed on any income from a property sale used by the seller (or a close relative) to buy or to secure title to other residential properties within a limited period of time, but this is only really of relevance to buyers who are legally resident in Hungary.
In the case of property acquired by a company, the profit from the sale of the real estate is taxed at the current corporate tax rate of 16 percent. The company can deduct all expenses relating to its activity. The cost of any renovation work that increases the value of the property, stamp duty, and lawyers/agents fees can be used to reduce your tax base on income from rentals or profit from selling the property. Such work does not include maintenance costs—so just painting the place doesn’t count.
The maximum tax-deductible depreciation on industrial buildings and buildings with long useful lives is 2 percent, while rental properties can be depreciated at a preferential rate of 5 percent. When calculating book depreciation, it is important to ensure that it corresponds to the anticipated useful life of the property and to the company’s accounting policy. Under the Act on Corporation Tax, 20 percent withholding tax must be deducted from dividends paid abroad by Hungarian companies, unless paid to an EU resident parent company whose holding in the payer meets certain conditions, or a double taxation treaty provides otherwise.
1 percent of the property price plus 20 percent local VAT (this might include the cost of applying for the permit at the land authority)
This is usually paid by the buyer. Most sellers are reluctant to pay high brokerage fees.
This is also paid by the buyer. If you are selling shares in a company, there is no liability for stamp duty. New income tax and VAT rules Personal income tax when selling residential property in Hungary is 25 percent. This tax amount can be lowered if the real estate being sold is named on the title deed (tulajdoni lap) as a residential house/dwelling (lakóház) or flat (laká).![filekey=|2873|]
- If you buy and sell a home or flat in the same year, you are liable for the full 25 percent VAT.
- If you sell in the 2nd year, you may pay 10 percent less (i.e. net 22.5 percent).
- In the 3rd year, 40 percent less (i.e. net 15 percent)
- In the 4th year, 70 percent less (i.e. net 7.5 percent)
- In the 5fth year and after, there is no VAT payment.
Property acquisition discounts came to an end in January 2008, which means that using the money to purchase another house or flat does not remove your tax obligations. There is only one exception to this rule, which is buying living quarters for you or for a near relative in a nursing home.
The seller must comply with the legally stipulated notification requirements toward those having rights of pre-emption (i.e. first refusal to buy the property if it comes up for sale). Vendors must ensure that they possess relevant property ownership documents and and that they have paid any outstanding tax or utility bills on their property. The seller is obliged to sell the property free from defects and is liable for defects which reduce the value of the property or prevent the use of the property for a particular purpose. If the property lacks a particular characteristic which the vendor claimed it possessed, the vendor is liable.
The normal means of marketing a property in Hungary is via an estate agent who can also value your property. If you used an agent to buy your Hungarian home, it could make sense to use the same one to sell it, as they will already know the property. Before you take on their services, you should check carefully what they will and will not do in terms of marketing and what they will charge as commission—make sure that you shop around to get the best service.
On the other hand, it is increasingly easy to sell without an agent. There are more and more specialist websites and magazines advertising property for sale in Hungary. The key advantage here is avoiding the estate agent’s fees. You will need to do your research to get the price right as just looking at the adverts will not be enough. You will need to get out and see comparable properties in your area and check out their facilities. Alternatively, you could try to sell your property at auction.
Once all the necessary legal checks have been completed to the satisfaction of the buyer, you will be ready to sign a private sales contract. Before this stage you should have had the contract translated into English and ideally have English-speaking assistance on hand during the signing. The contract is prepared by the selling broker and signed at the office of the broker. The private contract details the finer points of exactly what you are selling, and includes all the fundamental information about the sale such as the purchase price (including how and when it should be paid), the list of fixtures and fittings included in the sale, and the completion date when the deeds will be signed and the property transferred into your name. This agreement commits both buyer and vendor to complete the transaction and at this point the buyer must pay a deposit which will be forfeited if the buyer walks away from the deal subsequently. However, if the vendor reneges on the deal at a later date, they are liable repay the buyer twice the value of the deposit in compensation.
Once the deposit is paid, the buyer will seek permission to purchase from the relevant local authority. This process can take up to 90 days, so it is essential that you plan the sale carefully and factor this delay into the overall timeframe.
After the technical handover of your property the final payment is due by the buyer. At this stage your solicitor will take care of repaying any outstanding mortgage amount. The buyer is obligated to notify the seller immediately after receiving purchase permission from the Administration Office. Following notification, the buyer must also transfer the balance of the purchase price. Closing usually takes place within a week from receipt of the purchase permit. During the process, the seller and the buyer will sign the closing statement, which is a declaration that the purchase price is paid in full and possession is transferred.
The buyer obtains full title when the property is entered onto the land register. You should be aware that the registration procedure can take anywhere from one to six months from the time of filing the necessary documents at the Land Registry office.
Source: https://frontera.net/news/emerging-europe/emerging-markets-closer-look-hungary/