HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
8.5 Tax Benefits The depreciation of assets is generally available for corporate income tax purposes. However, no depreciation may be accounted for in relation to the original cost of land, plots of land (other than those used for mining or the disposal of hazard - ous waste) or forests, or of the assets that were not activated. Special tax allowances are available from corpo - rate income tax with regard to the maintenance and renovation of historical buildings, subject to the following further conditions: • Costs and expenses of the maintenance of historical buildings in the tax year are deduct - ible from the taxable base of corporate income tax (in addition to their counting as expense or cost) up to 50% of the pre-tax profit of a company. Such tax allowance shall not exceed the HUF equivalent of EUR50 million. • Twice the amount of the costs of the acquired tangible assets relating to the historical build - ings and the costs of investment and renova - tion is deductible from the taxable base of corporate income tax. Such allowance can be applied – regardless of whether the invest - ment/renovation was put into use – from the tax year of the acquisition or the starting year of the investment until the fifth tax year following the completion of such investment. Such tax allowance shall not exceed the HUF equivalent of EUR100 million per investment project.
property). The tax exemption must be requested from the tax authority. In all cases, the respective local municipality’s decree should be reviewed for tax exemption and tax rates. Certain municipalities do not levy real estate taxes. 8.4 Income Tax Withholding for Foreign Investors No withholding tax is currently applicable in Hungary on dividends, interest or royalties paid to foreign corporate entities. If tax exemption does not apply, 15% withholding tax is payable by foreign private individuals on their income from Hungarian real estate. Foreign investors’ profit (adjusted in accordance with the provisions of Act LXXXI of 1996 on Cor - porate Tax and Dividend Tax) from the rental of domestic real estate is subject to 9% corporate income tax. Their revenue from the same activity is subject to 2% local business tax. In addition, the rules of global minimum tax apply for multi - national enterprises with revenue above EUR750 million. Foreign investors can also be subject to corpo - rate income tax on their income from the transfer or withdrawal of a participation in a Hungarian real estate holding company (unless the applica - ble double tax treaty prohibits the application of such tax by Hungary). A real estate holding com - pany is, generally, a company whose total assets in its balance sheet are composed of real estate by more than 75% (including the real estate held by related companies and their Hungarian per - manent establishments).
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