1. What documents does the Hungarian tax authority accept for certifying foreign tax residence?
Any foreign person can certify his/her residence with a copy of the professional Hungarian translation of the English document issued by the foreign tax authority.
2. When is the income tax return relating to the tax year to be submitted to the tax authority?
Any private person not obliged to pay any value added tax and not performing any entrepreneurial activity shall submit his/her return No. 53 and pay the tax by the 20th of May of the year following the tax year. In any other case the deadline for submitting the return and paying the tax shall be the 25th of February following the tax year.
3. Where can foreign persons obtain the form for submitting their personal income tax returns?
The return form can be downloaded from the internet website of Nemzeti Adó- és Vámhivatal (NAV) (National Tax and Customs Administration) (www.nav.gov.hu) or the hard copy is available free of charge in the customer service offices of the tax authority.
4. What is the extent of the tax burdening pensions disbursed from abroad?
In Hungary pensions received from abroad are also free of any tax.
5. A non-Hungarian citizen habitually living abroad bought an apartment in Hungary ten years ago and now wants to sell it. How much tax does he need to pay?
According to the Hungarian tax regulations no tax obligation arises of any private person having acquired his/her property considered to be a home in the fifth year preceding the sale or earlier. If the sale took place within five years, 16 percent personal income tax shall be paid after the established income and a tax return shall be prepared regarding the income. The amount of the income originating from selling the property may be decreased by a legally established percentage subject to the year of the sale.
VALUE ADDED TAX
I. Right for tax reimbursement of taxpayers settled abroad
1. As a taxpayer settled abroad, am I entitled to reclaim any value added tax charged in connection with products or services purchased in Hungary?
Any taxpayer having settled abroad can exclusively reclaim any value added tax charged in connection with his/her domestic purchases if he has settled in the territory of the Community or, based on any international contract, there is reciprocity with the country in which he has settled. Currently, there is a reciprocity based on an international contract with Lichtenstein and Switzerland, i.e. taxpayers being the residents of these countries can also reclaim the value added tax.
A further condition of reclaiming the tax is that the taxpayer does not perform any domestic economic activity and may maximum perform
forwarding activity and any activity incidentally related to it and being exempt from taxation based on the act on value added tax, or
any passenger transport activity exempt from taxation, or
any transaction performed domestically but being subject to reverse taxation, in which the taxpayer does not become obliged to pay tax.
Tax reclaiming shall not be aimed at products or services that are subject to the prohibition of tax deduction also in respect of domestic taxpayers.
2. What are the products and services in case of which the prohibition of tax reclamation arises?
In respect of value added tax charged in connection with the following products and services there is a prohibition of reclamation. (The list is informative and in case of certain circumstances the tax reclamation restriction does not apply. In case you wish to apply for reclaiming value added tax charged in connection with these products it is expediential to ask for more detailed information in advance.)
other fuels, provided they are necessary for the operation of passenger cars;
products and services necessary for the operation and maintenance of passenger cars;
motorcycles with a cubic capacity of over 125 cm3;
other means of water transport suitable for sports or entertainment;
products and services necessary for the construction or renovation of residential properties;
road usage service;
service with entertainment purposes;
telephone service, 30 percent of the amount of the preliminarily charged tax burdening any data transfer service using internet protocol and aimed at conversation.
3. As a taxpayer settled abroad, how can I reclaim the value added tax charged for my purchase in Hungary?
If you have settled in the territory of the Community, you can submit your tax reclamation application electronically. The related form shall be submitted in the member state where you have settled. You can ask for information on the further details of the procedure from the authority competent according to the place where you have settled.
In case you have settled in Switzerland or Liechtenstein, you can submit your tax reclamation application both in hard copy and electronically. In the latter case the form IAFA_K shall be filled in.
Any tax reclamation application shall be submitted by the 30th September of the year following the given calendar year.
Any foreign taxpayer can submit an application for a period shorter than 1 calendar year but lasting for minimum 3 calendar months if the amount of the tax charged reaches EUR 400. The amount requested to be reimbursed shall be over EUR 50 if it relates to 1 calendar year or a period being such remaining part of a calendar year as is less than 3 calendar months.
II. Tax reimbursement of foreign passengers (citizens)
1. Who shall be considered to be a foreign passenger?
Any natural person that
shall be considered to be a foreign passenger.
2. If I buy any product in Hungary as a foreign passenger, under what conditions can I get back the value added tax charged at the time of the purchase?
Any foreign passenger can reclaim the value added tax in case of domestically bought products for which the following conditions are met simultaneously:
3. How can I get back the amount of the value added tax charged at the time of the purchase?
If at the time of the purchase the vendor issues such an invoice on the sale as also includes value added tax, he shall also complete the tax reclamation sheet and shall hand its two copies over. In this case, in the interest of tax reclamation, you will need to return the copy stamped by the customs authority to the vendor following taking the product out of the country and based on this the vendor shall reimburse the value added tax charged at the time of the purchase.
It is also feasible that the vendor does not charge the value added tax already at the time of the sale, simplifying this way the procedure, but in this case, too, the copy of the tax reclamation sheet issued upon the purchase and stamped by the customs authority shall be returned to him.
1. How much duty shall be paid upon buying an apartment?
In case of buying an apartment the basis of the duty shall be market value of the apartment and the extent of the duty shall be 2% up to HUF 4 million and 4% of the remaining part of the market value. If a definite ownership share or a right of pecuniary value (usufruct or usage) is acquired, then the tax authority will proportion the HUF 4 million value limit according to the ownership share or the value of the right of pecuniary value.
2. How much duty shall be paid in case of buying any other property (cottage, garage, storage facility, etc.)?
After any property not considered to be an apartment the basis of the duty shall be the market value and the extent of the duty shall be 4% up to HUF 1 billion for each property but not more than HUF 200 million for each property.
3. I have bought an apartment in Hungary; how can I fulfil my obligation regarding paying the duties?
Following buying a property the competent tax directorate of the National Tax and Customs Administration issues a warrant for payment to the acquirer of the property, such warrant for payment including the amount of the duty and further important data relating to the obligation of paying the duties (market value of the property, information on appealing, etc.).
If no special registered agent has been appointed for receiving the documents generated in connection with the duty case, the tax authority will deliver the warrant for payment to the foreign address of the acquirer of the property.
Unless he/she lodges an appeal against the decision, the acquirer of the property shall perform his/her obligation of paying the duties within 15 days of the warrant for payment becoming binding, by means of bank transfer to the IBAN account number provided in the warrant for payment. Further information regarding foreign-exchange transfer orders you can find at http://en.apeh.hu/taxation/accountnumbers/account_numbers_IBAN.html.
4. If I present my apartment in Hungary to my child for his 21st birthday, does it entail any tax payment obligation for me in connection with the presentation?
Based on the Hungarian rules relating to duties any presentation between lineal relatives (including the relationship based on adoption) is exempt from the obligation of paying duties.
This means that in case you present your apartment to your child then no duty payment obligation will arise for the child and either the tax authority will issue any warrant for payment regarding the obligation of paying any duty.
In connection with the contract on presentation it shall also clearly be certified that the presenter and the presentee are in lineal (ascending-descending) relationship with each other.
5. My parents have deceased and they had a property in Hungary, too. I would like to ask if I have to pay an inheritance duty in Hungary for inheriting the property located in Hungary.
The Hungarian duty regulations shall apply to any property estate located in Hungary. As inheritance between lineal relatives is exempt from inheritance duty, if the child inherits the Hungarian property of the parents, no duty payment obligation arises for the child in Hungary for acquiring the property and neither the tax authority will issue any warrant for payment regarding the obligation of paying any duty.
In addition, it is necessary to review the webpage http://en.apeh.hu/taxation/duty_payment_purchase_real_estates.html because also on this site you can find information that could as well be among the Frequently Asked Questions.
Further, it is necessary to supplement the part titled „Notification of the tax authority of the acquisition of property” of the page with the following:
For purchasing, presenting and inheriting any property, the competent tax directorate of the National Tax and Customs Administration will issue a warrant for payment (decision) to the acquirer of the property, such warrant for payment including the amount of the duty and further important data relating to the obligation of paying the duties (market value of the property, information on appealing, reporting obligation, default penalty charged for the delayed performance of the reporting obligation, etc.).
Unless he/she lodges an appeal against the decision, the acquirer of the property shall perform his/her obligation of paying the duties within 15 days of the warrant for payment becoming binding, by means of bank transfer to the IBAN account number provided in the warrant for payment and held with Magyar Államkincstár (Hungarian State Treasury). Unless an appeal is lodged against it, the day when the warrant for payment becomes binding shall be the day following the last day of the timeframe available for submitting the appeal.
[In case the Land Registry has still not registered the ownership/right of pecuniary value of the acquirer of the property, then a duty in advance payable by the 30th day of the communication of the warrant for payment shall be paid. Unless he lodges an appeal against the decision, the acquirer of the property shall also perform this obligation to the IBAN account number held with the Hungarian State Treasury and provided in the warrant for payment. The warrant for payment shall be considered to be an executable document to the extent of the amount of the duty in advance, regardless of any appeal.]
In addition to the bank account number, the following data shall be provided on the foreign-exchange transfer order:
name of beneficiary: NAV
address of beneficiary: 1373 Budapest Széchenyi u. 2.
bank of beneficiary: Magyar Államkincstár (Hungarian State Treasury)
SWIFT code: MANEHUHB
The tax identification number to be found on the payment order (in Hungarian: adóazonosító) shall be indicated in the column "Kedvezményezettel közlendő" (To be communicated to the Beneficiary) by all means because the payment will be able to be credited with this on the tax current account held with the tax authority.
Against the warrant for payment an appeal can be lodged within 15 days of the communication, such appeal to be addressed to Nemzeti Adó- és Vámhivatal illetékes Regionális Adó Főigazgatósága Hatósági Főosztálya (Official Department of the competent Regional General Tax Directorate of the National Tax and Customs Administration) and to be submitted to the Duty Imposition Department of NAV having imposed the duty.
Appealing is subject to paying a duty. If the value of the subject of the appealing procedure can be established, the extent of the duty shall be HUF 400 after each commenced HUF 10,000 of the sum in dispute but not less than HUF 5,000 and not more than HUF 500,000. If the value of the subject of the appealing procedure cannot be established, the duty payable for the appeal shall be HUF 5,000 payable to collection account No. HU97-10032000-01076064 of NAV held with the Hungarian State Treasury and called "Adóhatósági eljárási illetékhez kapcsolódó befizetések" (Payments related to duties payable for the procedures of the tax authority).
The obligation of duty payment shall be fulfilled by the legally specified deadline. In case of any delayed payment a default surcharge corresponding to the 365th of the double of the base interest rate of the central bank valid at the date of charging shall be charged for the existing debt for each calendar day from the due date. In case of any failure to pay an execution procedure shall be instituted.
The acquirer of the property can submit any application related to the established duty by mail, to the mailing address of the competent Tax Directorate of the National Tax and Customs Administration.”