What taxes are payable in relation to the purchase of real estate via the various types of corporate vehicle available and who is responsible for the payment of these taxes?
The acquisition of real estate in Hungary as part of a purchase, exchange or similar transaction is normally subject to real estate transfer tax, payable at 4% of the market value. A reduced rate of 2% applies to the value above HUF1 billion. Nevertheless, the transfer tax payable cannot exceed HUF200 million per real estate. The tax authority will normally accept the consideration stated in the transfer agreement as the market value unless it is obviously too low.
The main exceptions to the general transfer tax rate are:
The acquisition of 75% or more of the shares (including shares held by close relatives, related parties, etc) in a company holding Hungarian real property is subject to transfer tax provided that the balance sheet value of the company's Hungarian real property (or properties) exceeds 75% of the company's total balance sheet value (subject to certain adjustments). In such cases the general tax rate, ie 4% applies. Nevertheless:
The definition of a company holding Hungarian real property also includes companies which themselves are not owners of real property, but have, directly or indirectly, an equity interest of at least 75% in another company (other companies) owning Hungarian real property. If no adjustment applies as prescribed by the Duties Act, the tax base is the market value of the real property (or properties) owned by the acquired entity (or entities) in proportion to the shares held by the acquirer.
The transfer tax is paid by the buyer.