Rental income from residential property in Hungary is subject to tax, regardless of whether the owner is resident in Hungary or not. If you own a rental property in Hungary, you have an obligation to declare this income by submitting a tax return to the Hungarian tax office each year.
An individual is considered non-resident in Hungary if s/he does not spend 183 days or more in any tax year in Hungary or does not have their primary residence there.
In Hungary, you can choose to either pay income tax on 90% of the received income or pay tax on the actual profit i.e. received income with actual incurred costs in relation to the rental property deducted.
Local Hungarian Property Tax
If you own a property in Hungary, you’ll also have the pay property tax. The amount you pay depends on the location where the property is situated. The average cost per year is around €3 per sq/m or a maximum of 3% of the market value of the property.
Hungarian Capital Gains Tax
Capital Gains Tax is payable on the sale of a Hungarian property. The current rate of CGT in Hungary is 16% and is payable on the profit in disposal i.e. the difference between the sale price and original purchase price plus any related expenses. If a property is owned for more than five years, a CGT reduction of 10% per year applies. If a property is owned for more than 15 years no CGT is payable on the sale of the property.
UK & Irish residents
If you are resident in the UK or Ireland you will have to report any income received in Hungary on your annual resident tax return (i.e. your Irish or UK tax return). There are double taxation agreements in place between Hungary and Ireland and Hungary and the UK so double taxation relief will usually apply. Your PTI Account Manager can advise you about double taxation relief and/or filing your resident tax return.
Overview of Hungarian Tax Services
PTI provides a complete range of Hungarian tax services for the investor and lifestyle property markets. If you’re required to file a Hungarian tax return and you would like to work with a tax company that will explain the process in plain English and offer the service at an affordable price, PTI is here to help. We provide the following services:
- Hungarian personal tax number and tax identification number registration
- Hungarian personal income tax filing – real expenses regime
- Hungarian personal income tax filing – simplified regime
- Assistance with payments of Hungarian tax
Your dedicated Hungarian tax specialist will be your one point of contact throughout the return process and will communicate directly with the Hungarian tax office when required.
- Who should file a tax return?
- Individuals who receive income from real property situated in Hungary are required to file a tax return and cover the liability (if any) regardless of their residency status in Hungary. Non-residents are taxed on income arising from Hungarian sources only and are liable for a number of other property-related taxes.
- What is the rental income tax rate?
- The current income tax rate in Hungary is 15% and there are currently two methods of calculating it. A taxpayer will pay tax either on the received rental income reduced by 10% or on the actual profit i.e. received rental income deducted with allowable costs incurred through the year.
- What is the Hungarian property tax rate?
- Local property taxes (rates) are also payable and vary per property size and location. The average cost of local taxes is around €3 per sq/m per year.
- What sort of tax number is used in Hungary?
- The tax number consists of 10 digits and is called “adóazonosító jel”. It is required for all taxpayers in Hungary.
- Am I obliged to apply for a tax number even if I am non-resident?
- Yes, every non-resident who is liable to pay certain tax including local property tax is required to apply for a tax number. In addition a tax number is also required when starting a rental activity for profit and even when buying or disposing of a real estate.
- What are the required documents for filing a rental income tax return in Hungary?
- Management report on income and expenses or other documents containing same information e.g copy of bank statements;
- Copy of all relevant invoices for renovation, repairs and other expenses if any;
- Copy of the rental contract
- Are capital gains derived from the disposition of real property taxable in Hungary?
- Capital Gains on the disposal of Hungarian property are currently taxed at 16% rate. The taxable gain is the sales price less the acquisition cost and expenses relating to improvements and the transfer of the property. If the property to be sold has been owned for 5 or more years 10% reduction per year from the CGT applies. If a property is owned for more than 15 years no CGT will apply.
Tax Rates and Deadlines
The deadline for filing a Hungarian tax return is 20th May of the year following the tax year (i.e. for 2019 the deadline will be 20th May 2020). There is an extended deadline to 20 November for individuals who file a declaration to the Hungarian tax office stating a reasonable excuse why return cannot be filed.
(CGT on a sale of a company containing property is 5%)
Filing services are offered to non-Hungarian residents.
Initial documents review – €150.00
This fee will apply only once for review of your property related documents for set up of your tax file with PTI.
Tax number service fees or Tax registration – €100.00 per person
Hungarian personal income tax returns – real expenses regime – €260.00
This is a complete service covering the necessary tax returns and their annexes (single or married – 1 property), and includes a detailed review of all supporting documents.
Hungarian personal income tax filing – simplified regime – €200.00
This is a lower fee option which is available instead of the Personal Income tax return option above. If you choose this option a notional % deduction will be taken instead of actual expenses incurred. This option is usually beneficial for individuals if the level of expenses is low, or if no valid supporting documents are available (single or married – 1 property).
Additional property – €75.00
This fee is due for the second and each subsequent property if applicable.
Additional owner – €75.00
Tax clearance certificate – €50.00
The Hungarian tax office does not release automatic assessment notices. We can assist with tax clearance certificate applications if required.
Documents retrieval fee – €50.00
This fee will apply if you require PTI to obtain some documents on your behalf, excluding bank and mortgage statements.
Administrative fee – €20.00
This fee is obligatory and due for each year of submission. It covers postage, phone calls, photocopying etc.
Assistance with tax payments – €30.00
Multiple years discount – 10%
Available where returns for 2 or more tax years are required. This discount is applicable to the annual fees excluding any once off fees and administrative fee and does not apply where other discounts/reductions have been granted.
1. All fees are inclusive of VAT.
2. Prices are based on provision of information in pre agreed format – a surcharge of 20% may be applied for disorganised files.
3. Prices are based on provision of necessary backup documentation only – the inclusion of unnecessary documentation may result in the application of an additional charge.