HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
• 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 2026. However, if the sale of the new residential unit takes place between 1 January 2027 and 31 December 2030 and the building (or similar relevant) permit has become definitive by 31 December 2026, 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 8.3 Municipal Taxes Local Real Estate Taxes
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 2024 were: • 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 tempo - rary housing units, building structures used for the disposal of radioactive waste or incorporat - ed land used for agricultural purposes, historical buildings), but business premises are generally subject to local real estate taxes. Historical buildings could also be exempt from local real estate tax if they are being renovated – ie, general works and repairs are being per - formed on the entire historical monument or on its façade and several major structures in order to completely restore the original condition of the building in terms of aesthetic appearance (and at least the original technical fixtures). Tax exemp - tion could be applied for three consecutive years following the date of the permit becoming final. The renovation must be completed within three years; otherwise, the local real estate tax and related interest for the past period shall be due (such amount is secured by a mortgage on the
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