Who could be affected?
The draft legislation would assess wealth on an individual basis rather than at the family or household level. It would apply to Hungarian resident individuals whose total wealth, including financial assets, real estate, shareholdings and other valuable assets, exceeds HUF 1 billion.
For non-resident individuals, the scope would be narrower: they would be subject to the tax only on Hungarian real estate and shareholdings in Hungarian companies.
What assets would be subject to the tax?
The proposed definition of taxable wealth is broad and would include:
- Cash and financial assets
- Securities
- Rights under insurance contracts
- Crypto-assets
- Investment-grade precious metals and gemstones
- Real estate
- Shareholdings in companies
The tax would also apply to certain high-value movable assets, such as:
- Works of art, jewelry and collectibles individually valued at more than HUF 3 million
- Vehicles valued at more than HUF 10 million
Ordinary household furnishings and items of daily personal use would remain outside the scope of the tax.
Importantly, the proposal would tax net wealth rather than gross wealth. This means that documented debts and liabilities linked to the relevant assets could be deducted when determining the tax base.
How would assets be valued?
The draft sets out different valuation methods depending on the category of wealth.
- Financial assets, securities and crypto-assets: market value as of the valuation date
- Real estate: the original purchase price [Christoph1] [BZ2] adjusted by a price index, or the value determined using the tax authority’s nationwide mass valuation model
- Unlisted shareholdings: a statutory weighted average of the company’s equity value and capitalized earnings value, calculated using its average after-tax profit over the last three completed financial years
- Investment funds: net asset value
- High-value movable assets: individual valuation
What compliance obligations may arise?
Affected individuals would need to assess and report their taxable wealth as of 31 December of the relevant year. The tax would then be payable by 31 August of the following year, at the applicable rate of 1% or 1.5%.
The proposal would also introduce additional obligations for businesses. In particular, Hungarian companies with equity exceeding HUF 500 million could be subject to a new reporting requirement, regardless of whether their owners exceed the wealth tax threshold.
Another notable feature of the draft is that the tax authority would be permitted to examine potential tax avoidance involving transactions undertaken before the law enters into force.
How can we help?
Our experience shows that the practical implications of legislation of this kind, from valuation and structuring issues to cross-border considerations, rarely fall within a single area of expertise. To help clients navigate these complexities, KPMG has assembled a dedicated team of tax, legal, real estate and valuation professionals to provide comprehensive support across all relevant aspects of the proposed regime.
