HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
ment. The contractor is not entitled to encumber the property – rather, only the tangible assets of the owner. 7.7 Requirements Before Use or Inhabitation A structure may only be occupied if the competent authority has issued a final and binding occupancy permit verifying that such structure is suitable for safe and intended use and has been built in line with the building permit.
unit residential building with a total net floor space not exceeding 150 square metres if the building is located in a rust area (as described in 1.3 Propos- als for Reform ). Further relief is available to private individuals in the purchase of such residential units in rust areas. The sale and purchase of a company’s shares is VAT- exempt. 8.2 Mitigation of Tax Liability Structuring techniques are available to mitigate trans - fer tax liability, the applicability of which has been confirmed by the tax authority under specific circum - stances. Local municipalities can introduce rules for local tax on buildings and building plots in a municipality decree within the limits of the Local Taxes Act. Real estate tax must be paid semi-annually by the person registered as owner on the first day of the cal - endar year in which the transaction closes. In practice, the cost of the local business tax is usually divided between the parties on a time-proportioned basis for the year of the transaction. In 2025, the maximum rates of local real estate tax were: 8.3 Municipal Taxes Local Real Estate Taxes • approximately EUR7.5 per square metre for build - ings and approximately EUR1.4 per square metre for building plots; or • 3.6% of the adjusted market value of the building or 3% of the adjusted market value of the building plot, if the local municipality opts to impose the tax in its decree on the value of the real estate instead of its base area. Local Real Estate Tax Exemption There are certain tax exemptions (eg, for temporary housing units, building structures used for the dis - posal of radioactive waste or incorporated land used for agricultural purposes, historical buildings), but business premises are generally subject to local real estate taxes.
8. Tax 8.1 VAT and Sales Tax
Generally, the sale and purchase of real estate is VAT- exempt. The seller can opt to apply VAT to the sale and purchase of real estate in general or to non-residential real estate, in which case the sale and purchase would be subject to reverse charge – ie, the purchaser will be responsible for the assessment and payment of VAT. The VAT exemption does not apply to the transfer of new real estate (ie, real estate that has not been occu - pied or where less than two years have passed since its occupancy or development), nor to building plots. As such, the sale and purchase of such real estate is subject to VAT at the general 27% rate, which must be paid and assessed by the seller. A preferential 5% VAT rate can be applied to the sale of: • new residential units in a multi-unit residential building with a total net floor space not exceeding 150 square metres; and • single-unit residential units with a total net floor space not exceeding 300 square metres. The preferential VAT rate is expected to be applica - ble until 31 December 2026. However, if the sale of the new residential unit takes place between 1 Janu - ary 2027 and 31 December 2030 and the building (or similar relevant) permit has become definitive by 31 December 2026, the preferential VAT rate can be applied to such sales as well. The preferential VAT rate will remain applicable with regard to the sale of new residential units in a multi-
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