HUNGARY Law and Practice Contributed by: Katalin Andreides, Andreides Law
10.3 Tax Implications of Artwork Gifts and Donations The recipient of the gift is required to pay gift tax after a movable asset transferred domestically, such as a high-value painting, if the recipient receives a gift val - ued at more than HUF150,000. When gifting, the tax base is the net value of the prop - erty acquired by the recipient, meaning the market value of the gift minus any debts and burdens associ - ated with it. The general rate of the gift tax is 18% of the net value of the gift. 10.4 Artworks Exempt from Inheritance/ Donation Taxes Inheritance is exempt from tax when the artwork is received from a direct relative (including adopted fam - ily members), sibling, spouse or registered partner. No tax is required if someone renounces their inheritance free of charge – that is, without receiving compensa - tion. However, if the renunciation is made in exchange for compensation, the renouncing party must pay gift tax based on the value of the compensation received. Inheritance tax cannot be imposed if the artwork or collection is taken over by the deceased’s creditor to settle outstanding debts. In such cases, the estate creditor must pay a transfer tax on onerous property acquisition. Gifting between direct relatives (including adopted family members), siblings, spouses and registered partners is exempt from gift tax. The acquisition of property resulting from the termination of marital com - munity property is also exempt from tax. No tax is required on gifts received from charitable public dona - tions.
10.5 Trusts Fiduciary Asset Management Contracts (FAMCs) The Hungarian Civil Code defines fiduciary asset man - agement contracts (FAMCs), where the trustee owns and manages assets on its own behalf but for the benefit of the beneficiary. The settlor pays the related fees. FAMCs must be in writing and terminate after 50 years, even if established indefinitely or for a period longer than 50 years. Attempts to override this rule are void. Creditors of the settlor and trustee cannot claim against the trust property, but creditors of the beneficiary can claim once the assets or their benefits become due. Asset Management Foundations (AMFs) Asset management foundations (AMFs) are designed for managing family assets, allowing professional man - agement and investment activities. Unlike traditional foundations, AMFs can operate without a licence from the Hungarian National Bank and are bound by strict confidentiality, even during public authority inquiries. AMFs enable settlors and beneficiaries to retain con - trol by reserving the right to give instructions to the board of trustees. A minimum capital of HUF600 mil - lion is required, which must be maintained through - out the AMF’s existence. If the capital falls below the minimum for three consecutive years, the AMF must be liquidated.
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