HUNGARY Law and Practice Contributed by: Szabolcs Mestyán, John Fenemore, Balázs Rokob and Nóra Kertai, Lakatos, Köves & Partners
1.2.2 Sales Governed by English or New York Law Provided that the requirements set out in 1.2.1 Trans- ferring Title are met, transfer of title to an aircraft or engine physically delivered in Hungary should be rec - ognised if the bill of sale is governed by English or New York law. 1.2.3 Enforceability Against Domestic Parties In order to be enforceable against a Hungarian par - ty, the bill of sale should have full evidential power under Hungarian law (ie, it should be in writing, trans - lated into Hungarian and appropriately witnessed or notarised and, if executed outside Hungary, legalised). 1.2.4 Registration, Filing and/or Consent From Government Entities Any change in ownership must be reported to the CAA within 15 days from the effective date of the under - lying purchase bill of sale. The Hungarian Aircraft Register is a “notation” register in terms of ownership over aircraft. Registration itself does not constitute a change in ownership, but merely records any change in the ownership of any aircraft notified to the CAA. Formalities See 1.1.2 Enforceability Against Domestic Parties for the requirements for a bill of sale. Registration The fees payable to the CAA for registration of a title transfer in the Hungarian Aircraft Register is HUF64,000 (approximately EUR160). No separate government consents are required for a transfer of non-military aircraft. 1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale The transfer of the title, due to the execution or deliv - ery of the bill of sale or consummating the sale of the ownership in an entity that owns an aircraft or engine, can be subject to tax or duties as follows. Transfer of the Title of an Aircraft or an Engine Upon the transfer of the title of an aircraft or an engine, the seller may be subject to Hungarian corporate income tax (CIT), levied at a flat rate of 9% of the positive tax base (which is the pre-tax profit of the
seller adjusted by various items) if the seller is either a Hungarian tax resident entity or has a permanent establishment in Hungary. The revenue from the sale can also be subject to local business tax (LBT) levied by the Hungarian munici - palities at the maximum rate of 2% provided that the seller is regularly engaged in the sale of aircraft and engines as its business activity. In general, the sale of an aircraft located in Hungary or in transit to Hungary is subject to VAT (the general rate is 27%). The sale of an engine is subject to Hun - garian VAT if the engine is located in Hungary at the time of the sale. Where the aircraft or engine is to be transported abroad in connection with the sale, no Hungarian VAT should apply. However, the aircraft or the engine, operated by an entity engaged in international air traffic, is exempt from VAT under the currently applicable VAT laws. Hungary has implemented Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a glob - al minimum level of taxation for multinational enter - prise groups and large-scale domestic groups in the Union by Act LXXXIV of 2023 (the “GLOBE Act”). The GLOBE Act has become effective on 31 December 2023. Under the GLOBE Act, the taxpayer entity can be subject to additional tax on the income from the transfer of the title until the effective tax rate applying to the taxpayer reaches 15%. See 1.2.4 Registration, Filing and/or Consent From Government Entities on payable fees. Sale of an Ownership Interest in an Entity Where the ownership interest in an entity is held by a Hungarian tax resident company or a Hungarian per - manent establishment of a foreign entity, the profit of the sale of the ownership interest can be subject to corporate income tax (the rate is 9%).
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