Breaking news - The latest tax package draft has been released

On 19 October 2018, a new tax package was presented to the Parliament. Please find the most important amendments of the package here: the threshold of VAT exemption for SMEs will be raised to HUF 12 million, collective corporate taxation is coming, the international tax information exchange increases, the personal income tax liability of insurances taken out by employers is re-regulated, and, last but not least, the rules on the abolition of employer housing subsidies will be clarified.

Future of 5% VAT on residential properties in Hungary

The reduced 5% VAT rate on residential properties undeniably played an important role in strengthening the real estate industry. Although from the outset the reduction was incorporated for a fixed period of four years, between 2016-2019, many expected the long-term continuation of the rule. The Minister of Finance’s summer announcement cut an end for these hopes. The return of 27% VAT on such real estate will significantly affect the overall market; the consequence may be the further increase of property prices, but also the reduction of investors’ profits. Certain prepayment constructions may help to extend the validity of the reduced VAT period, but these require due care and attention from developers, buyers and financing banks.