The Hungarian Government has published a draft bill introducing a wealth tax from 2026. Under the current proposal, the first tax liability could arise in respect of assets held on December 31, 2026, with the related tax return and payment due in 2027. The proposal is currently under public consultation and may still change before enactment. From a global mobility perspective, the rules are particularly relevant because an individual’s tax residence would determine whether worldwide wealth or only certain Hungarian-connected assets fall within the scope of the tax, while specific exemptions and tax treaty provisions may also affect the final tax position.
Key rules in brief
Under the proposal, the tax liability would arise once a year based on the assets held on the last day of the tax year (typically the calendar year). As a general rule, the tax base would be the portion of the aggregate value of taxable assets, reduced by specified liabilities, exceeding HUF 1 billion (approximately EUR 2.73 million / USD 3.05 million).
The proposed tax rates would be:
The tax would have to be self-assessed, reported and paid by August 31 of the year following the tax year. Accordingly, the first filing and payment deadline for 2026 would be August 31, 2027. A return would only be required where an actual wealth tax liability arises.
The valuation rules would not be uniform. The proposal contains separate rules for, among other items, interests in companies, Hungarian and foreign real estate, movable property, financial assets and certain property rights.
Why is this particularly relevant for internationally mobile individuals?
For individuals whose lives or work span more than one country, tax residence would be a key issue because it would determine the scope of assets potentially subject to Hungarian wealth tax:
For a non-Hungarian tax resident, the relevant assets would include:
For non-Hungarian tax residents, only this narrower asset pool would need to be reviewed when determining whether the HUF 1 billion threshold is exceeded after deducting eligible liabilities.
Change of tax residence during the year
An important, detailed rule would apply where an individual ceases to be a Hungarian tax resident during a calendar year and does not become Hungarian tax resident again before year-end. In that case, the tax year would run from January 1 until the day preceding the cessation of Hungarian tax residence. As the tax liability arises on the last day of the tax year in respect of the assets held on that date, the relevant asset position would have to be assessed on the day preceding the change of residence, while the individual is still treated as a Hungarian tax resident.
A separate interpretative question arises for Hungarian assets that remain within the scope of wealth tax after the individual becomes non-Hungarian resident. For example, if Hungarian tax residence ends on April 30, 2027, but the individual continues to hold a significant portfolio of residential properties in Hungary, those properties would remain within the taxable asset category applicable to non-Hungarian residents. In our view, the same real estate portfolio should not be valued again on December 31. Since the relevant tax year closes on April 29, the assets held and their value determined on that date should be decisive.
Who would be treated as a Hungarian tax resident?
As a general rule, the proposal would rely on the definition of Hungarian tax residence under the Hungarian Personal Income Tax Act, supplemented by specific wealth tax provisions. For example, it would also treat as Hungarian resident a Hungarian citizen who also holds the citizenship of another country, even if that person has no registered permanent or temporary address in Hungary. This would differ from the approach under the Personal Income Tax Act.
The proposal includes three significant exceptions:
A non-Hungarian citizen would not be treated as Hungarian resident for wealth tax purposes for five years from the start of work in Hungary if the individual is employed in Hungary, through an assignment, secondment or temporary agency arrangement, by a foreign employer that is not registered under Hungarian law. A favorable transitional rule would apply to individuals already working in Hungary under such an arrangement: the five-year period would begin on the date the legislation enters into force rather than on the earlier commencement date of the Hungarian work activity.
This exception may raise practical and interpretative questions, for example where an assigned employee enters into a contractual relationship with the Hungarian host company while continuing the employment relationship with the non-Hungarian employer.
A Hungarian citizen who has been habitually living abroad for at least ten years on the last day of the tax year would not be treated as Hungarian resident, irrespective of whether the individual also holds another citizenship.
A special rule would also apply to individuals holding a national residence card issued in the national interest. Such an individual would not be treated as Hungarian resident if they spend fewer than 183 days in Hungary during the tax year.
How could tax treaties affect the wealth tax liability?
The proposal provides that the provisions of an international treaty would prevail where they differ from the wealth tax legislation, provided that the treaty also covers wealth taxes. Hungary currently applies 83 double tax treaties, and slightly more than half of them extend to taxes on capital or wealth. These treaties typically provide that assets may, as a general rule, be taxed only in the individual’s state of residence. Exceptions may include, among others, real estate and movable property forming part of a permanent establishment, which may also be taxed by the state in which the real estate or permanent establishment is located.
A separate interpretative issue may arise where an individual is treated as Hungarian resident under the Personal Income Tax Act but is resident in another state under the residence provisions of the applicable tax treaty, while the wealth tax itself falls outside the treaty’s material scope. The question is whether the foreign treaty residence, which overrides Hungarian residence for treaty purposes, should also be considered for Hungarian wealth tax purposes. In our view, treaty residence should remain decisive in such a case, having regard to the general principles governing the relationship between international treaties and domestic law.
What could this mean in practice?
For individuals working or living across borders, determining residence status may become the key starting point of any Hungarian wealth tax review. It could determine whether the individual’s entire worldwide wealth, including assets held in several countries, or only the Hungarian-connected assets specified in the proposal must be considered.
The review should therefore address the following questions in this order:
The practical application of the proposed rules may raise several interpretative questions, particularly in relation to tax residence, assignments, tax treaties and the identification of relevant assets. Vialto Partners Hungary would be pleased to assist with assessing these issues and reviewing the related wealth tax implications.
Please note that this alert is based on a draft bill published for public consultation and the proposed rules may change before enactment.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Roland Szabo
Managing Director
Denes Megyesi
Director
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