The proposed introduction of a wealth tax in Hungary may create significant tax, valuation and administrative challenges for high-net-worth individuals and wealth management structures.

For foreign individuals living in Hungary, one of the key questions is whether they qualify as Hungarian tax residents and, consequently, whether their Hungarian and foreign assets may fall within the scope of the Hungarian wealth tax. Determining tax residence can be particularly complex where the individual maintains personal, family or economic ties with more than one country.

Another major challenge is the valuation of privately held companies. Since no directly observable market price is normally available for unlisted companies, the value of the ownership interest may need to be determined based on the company’s assets, liabilities, earnings potential and ownership structure.

Our experts assist clients in assessing their exposure, determining the value of the relevant assets and estimating their potential Hungarian wealth tax liability.

Who do we recommend this service to?

Our wealth tax advisory service may be relevant, if

• you are a foreign individual living or working in Hungary;
• personal or economic ties with both Hungary and another country are maintained,
• substantial assets in Hungary or abroad are owned by you,
• you hold an ownership interest in a privately held company or family business,
• the potential Hungarian tax and filing obligations should be analyzed,
• you are considering changes to your ownership or wealth-holding structure.

Why is wealth tax advice important?

For foreign individuals living in Hungary, the first step is to determine their tax residence. This requires an assessment of the relevant Hungarian domestic rules and, where applicable, the provisions of the relevant double tax treaty.

Factors such as the location of the individual’s permanent home, family, centre of interests and habitual residence may be relevant. The outcome can directly affect whether only Hungarian assets or potentially worldwide assets need to be considered for Hungarian wealth tax purposes.

The valuation of ownership interests in private companies may also be complex. The book value of the equity does not necessarily reflect the relevant value of the ownership interest. The assessment may require consideration of the actual value of the company’s assets, its liabilities, profitability, future prospects and the rights attached to the ownership interest.

What do we do?

As part of our wealth tax advisory service, we:

• assess the individual’s Hungarian tax residence under domestic law,
• analyse the applicable double tax treaty where more than one country may consider the individual tax resident,
• identify the Hungarian and foreign assets potentially relevant for wealth tax purposes,
• determine the relevant value of privately held companies and ownership interests,
• assist with the valuation of real estate and other assets,
• calculate the estimated wealth tax liability, review liabilities that may be deductible from the tax base,
• assess the tax treatment of trusts, private foundations and other wealth management structures,
• and provide support with filing and documentation requirements.

Our approach combines Hungarian and international tax expertise with accounting and business valuation experience. Our objective is to provide clients with a clear understanding of their potential exposure and a well-supported calculation of their expected wealth tax liability.