Hungary’s 1% Wealth Tax Is Written and Goes to Parliament in October

Hungary’s government is preparing a 1 % annual tax on net wealth that exceeds 1 billion forint (≈ €2.7 million). The draft law will be submitted to parliament in October together with the 2027 state budget.

Core elements of the proposal

• Rate and threshold – 1 % per year on assets above 1 billion forint.
• Taxable assets – financial assets, real‑estate, securities and stakes in companies.
• Revenue estimate – the cabinet projects 300–600 billion forint (≈ €800 million–€1.6 billion) annually.
• Legislative status – drafting completed, announced by Balint Ruff (minister leading the Prime Minister’s Office); the bill will be debated in October.

Background

• The current government, led by Prime Minister Peter Magyar, originally proposed a tax on wealth above 5 billion forint; the threshold was lowered during the election campaign.
• Hungary presently has no wealth tax; both PwC’s Worldwide Tax Summaries and tax adviser WTS Klient confirm that no net‑wealth levy exists.
• A similar attempt in 2009 was struck down by the Constitutional Court because the law forced taxpayers to accept market valuations that could differ by up to 40 % from actual transaction values, violating legal certainty.

Open design questions

• Scope of the 1 % – It is not yet clear whether the rate applies only to the amount exceeding the threshold or to the entire estate once the threshold is crossed.
• Valuation of company stakes – Index notes that assessing the value of private‑company holdings is a particularly sensitive issue; the government has cited the Swiss model, where a tax system already prices such stakes, but details remain unpublished.
• Asset list – No definitive list of assets subject to the tax has been released.

International context

If enacted, Hungary would become the fifth OECD member to levy a net‑wealth tax, joining Norway, Spain, Switzerland and Colombia. (France, Italy, Belgium and the Netherlands tax narrower asset classes.) Norway is currently reviewing a reduction of its own wealth‑tax rate.

Interaction with the Guest Investor Program

• The Guest Investor Program grants a residence permit but does not automatically confer Hungarian tax residency.
• Hungarian tax residence is determined by:
  1. Permanent settlement in Hungary, or
  2. Ownership of a permanent home in Hungary, or
  3. Center of vital interests in Hungary, or
  4. Physical presence of ≥ 183 days in a calendar year.
• A guest‑investor permit is temporary and lacks a minimum physical‑presence requirement; therefore, investors who remain abroad are not Hungarian tax residents and would be exempt from a residence‑based wealth tax.
• Investment routes for the program:
  • Purchase of investment certificates worth ≥ 250,000 € from a property fund registered with the Hungarian National Bank, or
  • Donation of ≥ 1 million € to a Hungarian higher‑education institution.
  • Certificates are held in a blocked securities sub‑account for five years; it is unclear whether these Hungarian‑based assets would be subject to the wealth tax for non‑resident owners.
• The self‑employed route (independent work in Hungary) meets the tax‑residence tests, subjecting participants to Hungary’s 15 % flat income tax on related earnings.

Program uptake

• By February 2025 the Guest Investor Program had attracted 192 preliminary visa applications and 25 residence‑permit requests; the government has not indicated any expansion plans.

Outlook

The wealth‑tax bill will be introduced in October, but key details—such as the exact asset base, valuation methodology, and whether the 1 % applies only to excess amounts—remain undisclosed. Stakeholders, especially high‑net‑worth individuals and investors with Hungarian‑based assets, are awaiting clarification before assessing the tax’s practical impact.

Source article: www.imidaily.com