1. Restrictions
Can anyone (including foreigners) own and occupy real estate in the Hungarian jurisdiction (including shares in property owning companies)? Are there any restrictions?
In general yes, foreigners may own and occupy real estate and can hold shares in property owning companies, but acquisition of real property in Hungary by foreign (non-EU) legal and private persons is subject to the approval of the competent government agency, which is more of a formal administrative procedure. However, the acquisition of agricultural lands is highly regulated and several restrictions apply and as a general rule, only Hungarian or EU citizens qualifying as a farmer may acquire the ownership of agricultural lands.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
Based on Hungarian Real Estate Law, there are no special legal restrictions on lending for the purchase of real estate for foreign companies. However, banks may perform special procedure relating to their internal KYC/anti-money laundering procedures, especially in case of foreign companies from non-EU countries.
2. Taxes
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in the Hungarian jurisdiction.
Acquisition of real estate is subject to transfer tax. The general rate of transfer tax is 4% levied on the market value of the real estate. Various allowances are available for real estate traders, financial institutions and investment funds.
In general, the transfer of real estate is exempt from VAT under the VAT Act unless (i) the seller opted to apply VAT (the general rate is 27%), or (ii) building plot or new real estate is being sold. In the (i) case, the VAT is subject to reverse charge, i.e. to be assessed and paid by the purchaser.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Yes, in general, real estate is subject to land and building tax levied by the municipality where they are located. The taxes are levied, by the respective municipalities’ regulations on local taxes, on the basis of the market value or floor space of the real estate.
Further taxes may arise if business activity is carried out in relation to the real estate, such as corporate income tax, local business tax or VAT.
Apart from, which is explicitly charged to the customer, these taxes are usually included in the price passed to the customer.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in the Hungarian jurisdiction? If so what are they?
There are no tax breaks or other incentives for foreigners to buy real estate in Hungary.
3. Title of Real Estate
How is the ownership of Real Estate evidenced in the Hungarian jurisdiction?
All real properties located in Hungary are registered in the centrally organized Land Registry system. The main data kept by the Land Registry (i.e. area, classification of use, data on owners, encumbrances registered) is accessible to the public and that it authentically proves the accuracy of the registered information (i.e. “public credibility”), and as a result, it protects the rights of a good faith buyer who purchased the real property based on the information registered.
Is it possible to keep the identity of owners of real estate confidential in the Hungarian jurisdiction?
As the Land Registry is publicly available, it is not possible to keep the identity of the owner of the real estate hidden. The owner’s main data (name, seat/address; and in case of a company, the company’s registration number) is visible from the Land Registry. If the owner of the real estate is a private fund or private company limited by shares, the ultimate beneficial owner may not be revealed from the publicly available Land Registry and Company Registry data.
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