Inheritance and Gift Tax in Hungary

Find out about inheritance and gift tax and who has to pay it...

Inheritance Tax

Inheritance tax (Öröklési illeték) is levied on the beneficiary or legatee of property passing on death.

All persons, wherever resident, are liable to pay inheritance tax on all types of property situated in Hungary. In addition, Hungarian nationals and non-Hungarian nationals who live in Hungary are liable to inheritance tax on movable property situated abroad, unless the inheritance (or corresponding) tax was levied and paid abroad.

Inheritance tax does not apply to foreign immovable property.

Exemptions

In certain cases, inherited property is exempt from inheritance tax. The main exempted assets are as follows:

  • Property inherited by the testator's parent or child or spouse is free from duty regardless of the amount
  • Property inherited by the testator's step and foster parent or child is free from duty up to 20 million HUF
  • The first HUF 300,000 of movable property per beneficiary is exempt (excluding some property for example a car)

Gift Tax

Gift tax (Ajándékozási illeték) is levied on the donation of real estate, certain movable properties and the granting or waiver of certain rights. The main types of properties which are subject to gift duty are as follows:

  • Immoveable property situated in Hungary
  • Moveable property if the transfer of the gift takes place in Hungary
  • Rights related to moveable property if the acquisition of right takes place in Hungary
  • Vehicles registered in Hungary.

Movable property is not taxable if its value is less than HUF 150,000 and the gift is not officially documented in a contract or a document with a public notary for example.

Exemptions

In addition to the above, in certain cases the property is exempt from gift tax. The main assets that are exempt are as follows:

  • Residential building plots (provided that the beneficiary constructs a residential property thereon within four years from the acquisition)
  • Gifts on which income tax or social security contributions are payable by the giver or by the beneficiary
  • Employee benefits provided by the employer which are exempt from personal income tax
  • Gifts given to the donator's parent or child

Rate of Inheritance and Gift Taxes

Inheritance and gift tax are normally calculated on the market value of the property.

The general rate of tax is 18 percent of the net value of the inheritance or gift received. The duty rate is nine percent on the acquisition of residential property.

Taxes on the inheritance or donation of motor vehicles and trailers is calculated at twice the rate of the transfer duty of the motor vehicle or trailer.

Transfer Duty

The acquisition of real estates, certain movable properties (for example motor vehicles and trailers) and rights is subject to transfer duty.

The general rate of the duty is four percent of the market value of the movable properties.

With respect to the acquisition of motor vehicles and trailers, the rate of duty depends on the engine capacity and the age of the vehicle.

The duty is payable by the transferee.

Exemptions include:

  • Land suitable for residential development, provided that the transferee constructs residential property on the land within four years of the transfer
  • The first acquisition of new residential property with a fair market value of not more than HUF 15 million and the transfer of property between direct-line relatives
Information supplied by BDO Hungary Ltd. 1103 Budapest, Kőér utca 2/A, building C Contact: Gábor Kertész - Tax Manager Tel: (1) 235 3010 e-mail Website