HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
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 trans - fer of new real estate (ie, real estate that has not been occupied or where fewer than two years have passed since its occupancy or develop - ment), 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 residen- tial 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 applicable until 31 December 2024. However, if the sale of the new residential unit takes place between 1 January 2025 and 31 December 2028 and the building (or similar relevant) permit has become definitive by 31 December 2024, then the preferential VAT rate can be applied to such sales as well. The preferential VAT rate will remain applica - ble with regard to the sale of new residential units in a multi-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 Proposals for Reform ). Fur - ther 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 transfer tax liability, the applicability of which has been confirmed by the tax authority under spe - cific circumstances. Local municipalities can introduce rules for local tax on buildings and building plots in a munici - pality 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 calendar year in which the transaction closes. In practice, the cost of the local busi - ness tax is usually divided between the parties on a time-proportioned basis for the year of the transaction. The maximum rates of local real estate tax in 2023 were: 8.3 Municipal Taxes Local Real Estate Taxes • approximately EUR5.8 per square metre for buildings and approximately EUR1 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 tem - porary housing units, building structures used for the disposal of radioactive waste or incorpo - rated land used for agricultural purposes), but
334 CHAMBERS.COM
Powered by FlippingBook