HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
taining to construction. Several other authorities may also be involved, including the heritage pro - tection authority and the environmental authority. Authorities may apply a wide range of measures against unlawful construction, including issuing a notice to comply; if the notice is ignored, they may impose a fine or even suspend the con - struction until the breach is remedied. Restric - tions on designated use may also be enforced by the locally competent land registry, through similar measures. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets All types of entities are available to investors to hold real estate. The most commonly used entities are limited liability companies ( korlátolt felelősségű társaság , or Kft.), private limited companies ( zártkörűen működő részvénytár - saság , or Zrt.), regulated real estate investment companies ( szabályozott ingatlanbefektetési társaságok , or SZIT) and real estate investment funds. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company The liability of members extends only to the pro - vision of their initial contributions (the amount of each contribution may not be less than HUF100,000). Members shall bear liability for the company’s obligations only in very limited cases. The company can be established by a sole member. Public and Private Limited Company The shareholders of a public limited company may not be held liable for the company’s obliga - tions (with some exceptions). Their obligation to
the company extends to the provision of funds covering the nominal value or the accounting par value of shares. Limited companies with shares listed on a stock exchange are called public limited companies, while those with shares not listed on any stock exchange are called private An investment fund is either an Alternative Investment Fund (AIF) ( alternatív befektetési alap , or ABA) or UCITS (Undertakings for the Collective Investment in Transferable Securi - ties) fund ( átruházható értékpapírokkal foglalkozó kollektív befektetési vállalkozásokra , or ÁÉKBV), in accordance with the relevant EU directives and with Act XVI of 2014 on Collective Invest - ment Trusts and Their Managers and on the Amendment of Financial Regulations. An invest - ment fund manager must have initial capital of at least EUR125,000 (or at least EUR300,000 in the case of real estate funds). limited companies. Investment Funds Generally, investment funds are exempt from corporate income tax and local business tax. 5.3 REITs REITs are available in Hungary, but are not com - monly used as a high percentage of the shares shall be owned by small investors. Only a public form exists. Exemptions from corporate income tax and local business tax are available. 5.4 Minimum Capital Requirement The initial capital of limited liability companies may not be less than HUF3 million, while the share capital of private limited companies may not be less than HUF5 million, and the share capital of public limited companies ( nyilvánosan működő részvénytársaság , or Nyrt.) may not be less than HUF20 million.
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