Hungary: wealth tax on homes and luxury items

A new wealth tax is to be introduced from 1 January 2010 as part of the Government’s budgetary reforms.

Under the legislation, which was published in the Official Gazette just over a week ago, tax will be payable annually on the market value of residential property in Hungary (owned by companies or individuals) except for:

• residential property with a market value of up to HUF 30 million in which the owner actually lives
• up to one further property in Hungary worth less than HUF 15 million

The rate of tax is progressive: 0.25% of the market value up to HUF 30 million, 0.35% of the market value between HUF 30 and 50 million, and 0.5% of the excess. To make collection easier for the tax authority, deemed market values are included in the legislation, including adjustments to reflect items such as location and access to a swimming pool or garage.

The tax (at different rates) will also be levied on:

• sailing and motor boats and airplanes either registered in Hungary or owned by Hungarian individuals or companies (wherever registered)
• cars with a motor capacity above 125 kW (existing motor vehicle tax can be offset against it)