As a general rule, companies registered in Hungary are allowed to acquire commercial real estate assets in Hungary, irrespectively of the nationality of their owners ie even if the owners of such companies are foreigners, as well as EU citizens.
However, there are certain restrictions and prohibitions on the acquisition of arable land, such as agricultural land or forests. In general, ownership of arable land may only be acquired by domestic natural persons and EU nationals who qualify as farmers. In addition to the above, the acquisition of arable land is also subject to strict rules and regulations. With a few rare exceptions, legal entities and non-EU citizens are prohibited from acquiring arable land.1
In addition, foreign citizens or legal entities may acquire real estate only with the consent of the relevant administrative office.2
[1] Act CXXII of 2013, 9.§ (1), 10.§ (1)
[2] Gov. Decree 251/2014 on the acquisitions by foreigners of real estate other than agricultural and and forestry land
Last modified 13 Mar 2025
In Germany, real estate assets can be held in two ways: either with or without a permanent establishment (Betriebsstätte). In the first case the investor either sets up a registered permanent establishment in Germany (ie a branch office) or acts through a non-registered permanent establishment.
A permanent establishment is a fixed place of business (eg an office) in which the investor's trade or business is carried on. Investors can therefore only directly invest through a permanent establishment if they operate a trade or business. This is deemed to be the case in any of the following scenarios:
The cost of setting up a registered permanent establishment starts at EUR3,000, including fees for registration in the commercial register and notary’s fees.
At best, setting up a permanent establishment is likely to take four weeks (including preparatory work, obtaining the necessary documents and filing for registration). However, since registering a permanent establishment requires certain documents from the investors’ home country (such as certified official register excerpts, a certificate from the secretary and experts’ opinions) the process more usually takes about six weeks. Registration itself may take additional time after the application for registration has been filed, depending on the workload at the local court in charge of the commercial register.
Last modified 13 Mar 2025
There are various investment vehicles that can be used for real estate investments in Germany. The two main corporate vehicles are:
Additionally, there are collective investment vehicles permitting a number of investors to invest indirectly in real estate:
The only partnership under German law that offers partners limited liability is the Kommanditgesellschaft (KG), a limited partnership with at least one general partner who has unlimited liability.
German corporate vehicles need to be registered in the German transparency register (Transparenzregister), disclosing its ultimate beneficial owner (UBO) within the meaning of German law. The UBO-requirements are very detailed and subject to individual review. Generally, a natural person holding more than 25% of the shares or voting rights in a legal entity or exercising control in a comparable manner or, if another legal entity holds more than 25% of the capital or voting rights of a legal entity (or exercises control in a comparable manner), the natural person who can exercise decisive influence on the ‘parent entity’ is considered a UBO. In case there is no UBO within the meaning of German law, management of the legal entity is considered as fictitious UBO and needs to be registered in the transparency register.
Last modified 13 Mar 2025
A limited liability company is the most common vehicle used for business activities in Hungary and has a distinct legal personality. It has unlimited liability to its creditors to the full extent of its assets, but the members of the company, as a rule, are not liable for the company’s obligations.
A company limited by shares is a business entity with a distinct legal personality and the shareholders, as a rule, are not liable for the company’s obligations. A company limited by shares may either operate as a private (zrt) or public (nyrt) company.
Subject to certain requirements (eg stock market presence, minor shareholder requirements, scope of activities restrictions, dividend distribution requirements, restrictions on executive officers or asset portfolio restrictions) any public company limited by shares (nyrt) may qualify as a regulated real estate investment company, ie a REIT (a real estate investment trust) if (amongst others) it has an initial capital (including subscribed capital, capital reserve and profit reserve) of at least HUF 5 billion and has been registered as REIT by the tax authorities.1
A limited partnership requires at least one member (the ‘general partner’) to have unlimited liability in relation to the obligations of the company that are not covered by its assets. At least one other member (a ‘limited member’) is only liable up to the extent of the equity contribution that such limited member makes as specified in the articles of association.
An unlimited partnership’s members have unlimited liability for the obligations of the company that are not covered by its assets.
A real estate investment fund consists of assets and liabilities only, and is managed and represented by an investment fund manager.2
[1] Act CII of 2011 on Regulated Real Estate Investment Companies, 3.§
[2] Act CII of 2011, 3.§
Last modified 13 Mar 2025
HUF 3,000,000 (with a minimum of HUF 100,000 per member)1
Public company limited by shares (nyrt): HUF 20 million (nevertheless, in the case of a regulated real estate investment fund, commonly named as a REIT (a real estate investment trust) the initial capital requirement (including subscribed capital, capital reserve and profit reserve) is at least HUF 5 billion).2 As a note, public company limited by shares (nyrt) may not be formed directly. It might only be transformed from a previously set up private company limited by shares (zrt).
There is no minimum capital requirement.3
There is no minimum capital requirement.4
Investment fund manager (a company limited by shares or a branch office of a foreign company)
Normally EUR 300,000 but can be higher in some cases.5 If the investment fund manager operates as a branch office, the minimum capital is the endowment capital (ie the capital provided to the branch, free of restrictions and encumbrances, in order to allow it to operate). The endowment capital requirement does not apply to the branch office of an investment fund manager established in another EU member state.
In order to maintain the continuity in its operations and to protect investors, investment fund managers shall have sufficient own funds to cover any and all risks associated with their activities, which may not be less than EUR 300,000 or the sum equivalent to at least 25% of fixed overheads of the preceding year.6
Investment fund
[1] Act V of 2013 3:161.§ (1)
[2] Act V of 2013 3:212.§ (2); Act CII of 2011 3.§
[3] Act V of 2013 3:154.§
[4] Act V of 2013 3:138.§
[5] Act XVI of 2014 on Collective Investment Trusts and Their Managers, and on the Amendment of Financial Regulations 16.§
[6] Act XVI of 2014. 16.§ (3)
[7] Act XVI of 2014, 68.§ (1a)
[8] Act XVI of 2014, 68.§ (2a)
Last modified 13 Mar 2025
Private company limited by shares:
Public company limited by shares (only to be transformed from a previously set up private company limited by shares):
A simplified registration procedure may apply (although this is not available for public companies limited by shares, branch or commercial representative offices), in which case the stamp duty is HUF 50,000 for a private company limited by shares, for other companies no stamp duty is payable.9
[1] Act XCIII of 1990, 45.§ (1a)
[2] Decree of the Minister of Justice 22/2006, 5.§ (3)
[3] Act XCIII of 1990, 45.§ (1) b
[4] Decree of the Minister of Justice 22/2006, 5.§ (1)
[5] Act XCIII of 1990, 45.§ (4a)
[6] Decree of the Minister of Justice 22/2006, 5.§ (1)
[7] Act XCIII of 1990, 45.§ (1a)
[8] Decree of the Minister of Justice 22/2006, 5.§ (3)
[9] Act XCIII of 1990, 45.§ (3)
Last modified 13 Mar 2025
The time available for the Court of Registration to decide on registration is usually 15 working days. However, if the application is submitted in the standard form for articles of association, a simplified registration procedure applies and the Court of Registration must decide on registration within one business day.1
An application for registration may only be submitted to the Court of Registration electronically through a lawyer.2
In the case of a real estate investment fund, the investment fund manager (either a company limited by shares or a Hungarian branch office) must be registered as described below.
The time available for the Court of Registration to decide on registration is usually 15 working days. However, if the application is submitted in the standard form for articles of association (not applicable in the case of public companies limited by shares and branch offices), a simplified registration procedure applies and the Court of Registration must decide on registration within one business day upon notification on the tax number by the tax authority.3
An application for registration may only be submitted to the Court of Registration electronically through a lawyer.4
Registration of the investment fund itself takes three months unless additional documents need to be submitted.5
[1] Act V of 2006, 46.§ (7), 48.§ (1)-(4)
[2] Act V. of 2006 on Public Company Information, Company Registration and Winding-up Proceedings., 33. § (2), 35. § (1)
[3] Act V of 2006, 46.§ (7), 48.§ (1)-(4)
[4] Act V. of 2006 on Public Company Information, Company Registration and Winding-up Proceedings., 33. § (2), 35. § (1)
[5] Act CXXXIX of 2013 on the National Bank of Hungary, 49.§ (4)
Last modified 13 Mar 2025
The main governing body of the company is the members’ meeting.1
One or more managing directors represent the company with sole or joint authority to sign on its behalf. The managing directors are appointed by the members’ general meeting. A member may also act as managing director.2 With some exceptions, a supervisory board is not mandatory but may be elected.3
Private company limited by shares
The main governing body of the company is the shareholders’ general meeting. The company is managed by a board of directors comprising a minimum of three directors. Board members are appointed by the shareholders’ general meeting and may have either sole or joint authority to sign on the company’s behalf. The articles of association may allow for the appointment of a sole general manager instead of a board of directors. It is possible to create different categories of shares with different rights, and voting and profit rights can be freely allocated. Private companies limited by shares do not need to have a supervisory board unless shareholders holding 5% of the voting rights request it.4
Public company limited by shares
The main governing body of the company is the shareholders’ general meeting. The company can operate either a one- or two-tier system. An audit committee with a minimum of three members is also mandatory and is appointed by the shareholders’ general meeting from the independent members of the board of directors or the supervisory board. Its duties include assisting the board of directors and the supervisory board in relation to financial reporting. At least one member of the audit committee shall have competence in accounting or auditing.5
Furthermore, the management board of a public limited company must have a governance and management report prepared yearly according to the rules applicable to the actors of the given stock exchange and present such report to the annual shareholders' general meeting for approval. The general meeting’s resolution and the approved report shall be posted on the website of the limited company.6
All companies limited by shares shall employ an auditor, however, the Act V of 2013 on the Civil Code allows alteration from that principle in case of private company limited by shares if the articles of association of the company so stipulates.7
One-tier system
The company is managed by a single body acting as a board of directors and a supervisory board. It comprises a minimum of five directors, the majority of the single body shall be independent. Board members and the chairperson of the board of directors are appointed by the shareholders’ general meeting, if the chairperson is not appointed by the general meeting, they shall be elected by the board itself. A sole general manager cannot be appointed for a public company.8
Two-tier system
The company is managed by a board of directors comprising a minimum of three directors. A supervisory board comprising a minimum of three people is mandatory and is appointed by the shareholders’ general meeting.9
In the case of a REIT (a regulated real estate investment company) members of the board of directors and the supervisory board must have a college/university degree, three years of management experience and no criminal record.10
The partners are given considerable scope to agree on corporate governance in the articles of association. Unless the articles state otherwise, a limited liability partner is not entitled to be involved in the management of the partnership, or to represent the company. There are no restrictions on how voting and profit rights are allocated with the exception that the partners may not be validly deprived of their voting rights. The unlimited liability partner is entitled to represent the company. Limited partners can take part in and vote at the members’ meeting.11
The investment fund itself is not a legally recognized organization but consists only of assets and liabilities. It is managed and represented by the investment fund manager.
[1] Act V of 2013, 3:188.§ (1)
[2] Act V of 2013, 3:196.§ (1)
[3] Act V of 2013, 3:119. §
[4] Act V of 2013, 3:268. § (1), 3:282. § (1), 3:283. §, 3:228-3:234. §, 3:290. § (3)
[5] Act V of 2013, 3:268. § (1), 3:291.§
[6] Act V of 2013, 3:284.§ (1)
[7] Act V of 2013, 3:268.§-292.§
[8] Act V of 2013, 3:285.§-286.§
[9] Act V of 2013, 3:282. § (1), 3: 290. § (1)
[10] Act CII of 2011, 6 § (1)
[11] Act V of 2013 3:138-158.§
Last modified 13 Mar 2025
EUR12,000 plus the cost of external auditors, which is likely to amount to between approximately EUR10,000 and EUR20,000. Auditors are only required when certain thresholds relating to the balance sheet total, turnover and number of employees are exceeded.
EUR20,000 plus the cost of external auditors which usually ranges between EUR10,000 and EUR15,000.
Due to the additional regulatory compliance obligations, the compliance costs depend on the individual structure and cannot be estimated on an abstract basis.
Due to the additional regulatory compliance obligations, the compliance costs depend on the individual structure as well as the NAV of the fund vehicle. Furthermore, costs/fees for the appointment of an AIFM, depositary bank and external auditor might apply. Therefore, these compliance costs cannot be estimated on an abstract basis.
EUR10,000.
Last modified 13 Mar 2025
15.825% corporation tax including a solidarity surcharge is payable on profits, and (generally) trade tax on taxable profit for trade tax purposes at a minimum rate of 7% (depending on the relevant municipality), which is defined as taxable profit for corporation tax purposes plus certain add back items and less certain deductions. The trade tax rates vary, since this tax is levied by the municipalities. A company, or corporation can have a tax presence in more than one municipality. The company or corporation can qualify for a trade tax‑exemption if it generates income only from leasing its own property. Business expenses, depreciation and amortisation are tax deductible. Deductions can also be claimed for interest, provided that the deductibility is not limited by the interest cap rule, introduced by the Business Tax Reform Act 2008. Under the interest cap rule, interest expenses are generally fully deductible as business expenses in an amount equal to the interest income of the business unit (Betrieb). If interest expenses in excess of interest income (that is net interest expenses) exceed EUR3,000,000, deductibility is limited to 30% of EBITDA (earnings before interest, taxes, depreciation and amortisation). Exemptions to this interest cap rule may apply.
In respect of trade tax, 25% of all interest on debt payments (as far as interest payments have already been deducted) and 6.25% of the expenditure on temporary usage rights (for example licences and concessions) must be added back into the taxable income to the extent it exceeds EUR200,000.
A GmbH must deduct withholding tax on dividends at the rate of 25% plus a solidarity surcharge thereon (total tax rate 26.375%).
Withholding tax may be credited against the investors’ income or corporate income tax. As regards private investors, in certain circumstances a flat tax of 26.375% may apply which is treated as settled by the withholding tax deducted.
If the EU Parent-Subsidiary Directive applies, (ie if dividends are paid by a German GmbH or AG to another EU corporation, which has held 10% of the shares in the German GmbH or AG for an uninterrupted period of 12 months prior to the distribution of dividends), and the shareholder is sufficiently large and active, no withholding tax is payable as long as the shareholder provides an exemption certificate to the company. The shareholder must apply for this certificate from the German Federal Central Tax Office (Bundeszentralamt für Steuern). If the shareholder has not obtained an exemption certificate but the requirements of the Parent-Subsidiary Directive and the substance requirements are met, the tax will be refunded upon application.
If the EU Parent-Subsidiary Directive does not apply, but a double‑tax treaty does, withholding tax of between 10% and 15% is normally payable (although this is generally deductible against tax due on taxable German income).
Withholding taxes exceeding these rates will be refunded upon application provided the shareholder meets the substance requirements. In addition, withholding taxes may be refunded eg if the shareholder held a stake of at least 10% of the share capital as of the beginning of the relevant fiscal year of the distributing entity.
German tax law provides a special tax regime for REITs when the following requirements are met:
The maximum direct shareholding by any one person or entity is limited to 10% of the shares. In addition, at least 15% of the shares must be held in free float and, at the date of the admission of the REIT, 25% of the shares must be held in free float. A share is held in free float if the shareholder holds less than 3% of the voting rights in the REIT.
At least 75% of the assets of a REIT must consist of real estate (an existing residential building cannot be part of the assets) and 75% of the REIT’s gross yield must result from leasing or selling immovable assets.
A REIT’s income is exempt from corporate and trade tax as long as at least 90% of its profits are distributed to the shareholders. If less than 90% of the profits are distributed the tax authorities may impose penalty payments amounting to between 20% and 30% of the difference between 90% of the profits and the dividends actually distributed.
Distributions are fully taxable at shareholder level. The REIT must impose a withholding tax of 25% (plus 5.5% solidarity surcharge thereon). Presently this withholding tax will be credited against assessed income tax and/or refunded if applicable.
As of 1 January 2009 the taxation of private income from capital investment was changed by the Business Tax Reform Act 2008. From that date private capital investment income became subject to a final withholding tax of 25% (plus 5.5% solidarity surcharge thereon) if certain requirements are met.
The fund is subject to corporation tax at a 15% tax rate for certain domestic income. The taxable domestic income includes, in particular:
The fund is subject to German trade tax if it is engaged in trade or business.
German investors in an investment fund are subject to tax on the following income (so called ‘Investment Income’):
The Investment Income may be tax-exempt to a certain extent (so called partial exemption – Teilfreistellung). For real estate funds, the partial exemptions amount to 60% if the fund holds domestic real estate properties and 80% if the fund holds foreign real estate properties. A qualified real estate fund is an investment fund which invests more than 50% of its value in real estate or real estate companies.
At the level of German private investors, investment income is subject to a final tax burden of 25% (plus solidarity surcharge of 5.5% thereon) in accordance with section 20 para 1 no. 3 of the German Income Tax Act.
Special investment funds are subject to the same principles set out above. Hence, the special investment fund is generally subject to German corporate income tax on certain domestic income. Other than the mutual investment fund, a German special investment fund may opt for a transparent taxation regime (Transparenzoption). When opting for the tax transparency status, certain income is directly allocated to investors.
The German Investment Tax Act offers various options to optimise the tax burden of an investment fund structure by considering certain investor-specific tax positions.
A KG is a tax‑transparent entity. The taxation of income from letting real estate in Germany by a partnership depends, for corporation tax purposes, on the status of its partners and, for trade tax purposes, on whether or not the real estate is held through a permanent establishment.
Corporate partners are subject to German corporate income tax at the rate of 15.825% (including solidarity surcharge). Individuals who are partners are subject to German income tax at their individual tax rate.
If the partnership has a permanent establishment in Germany it is subject to German trade tax on income. The partnership may qualify for a trade tax‑exemption if it generates income only from leasing its own property. If there is no German permanent establishment, no trade tax will be payable.
There is no additional tax on profit repatriation from the German partnership to investors.
The sale of real estate by the partnership, as well as a sale of an interest in a partnership which is not engaged in a trade or business, is treated as the partial sale of the underlying assets by the partners. Thus, the taxation depends on the legal status of the individual partners. Corporate partners are subject to German corporate income tax at the rate of 15.825% (including solidarity surcharge). Individuals are subject to German income tax at their individual tax rate.
If the German partnership is engaged in a trade or business, the partnership itself is subject to German trade tax at a rate minimum 7% on capital gains arising from the sale of real estate (although certain deductions and exemptions may apply). The trade tax rate depends on the municipality. The same applies to any capital gains from the sale by a corporation of its interest in a partnership.
Last modified 13 Mar 2025
Are foreigners allowed to invest by directly purchasing a commercial real estate asset?
As a general rule, companies registered in Hungary are allowed to acquire commercial real estate assets in Hungary, irrespectively of the nationality of their owners ie even if the owners of such companies are foreigners, as well as EU citizens.
However, there are certain restrictions and prohibitions on the acquisition of arable land, such as agricultural land or forests. In general, ownership of arable land may only be acquired by domestic natural persons and EU nationals who qualify as farmers. In addition to the above, the acquisition of arable land is also subject to strict rules and regulations. With a few rare exceptions, legal entities and non-EU citizens are prohibited from acquiring arable land.1
In addition, foreign citizens or legal entities may acquire real estate only with the consent of the relevant administrative office.2
[1] Act CXXII of 2013, 9.§ (1), 10.§ (1)
[2] Gov. Decree 251/2014 on the acquisitions by foreigners of real estate other than agricultural and and forestry land
Last modified 13 Mar 2025