For the management of very substantial assets, an asset management foundation is the solution.

If we are looking for a solution for the long-term preservation, efficient management, and tax-efficient generational transfer of significant wealth, an asset management foundation may be an appropriate instrument.

The well-regulated institution of the asset management foundation, equipped with safeguards, was established for the indefinite protection and growth of asset pools exceeding 600 million forints.

Definition of the asset management foundation

An asset management foundation is an independent legal entity registered by a court, which is entitled to manage the assets transferred by the founders for the purpose defined in the founding deed.

What is the difference between a traditional foundation and an asset management foundation?

An asset management foundation may be established not only for public-interest purposes but also for economic objectives. Therefore, an asset management foundation may also carry out investment activities, and it may provide distributions to beneficiaries from the income generated thereby. 

Plan with the help of the Private Clients division of LeitnerLeitner which structure best fits your personal, family, or business objectives. Make use of the  Family Office and succession planning services of LeitnerLaw. We also provide you with comprehensive professional support in the implementation process.

The establishment of an asset management foundation

The founder transfers the assets to the foundation and applies for its registration; thereafter, neither the founder nor the beneficiary has ownership rights over the assets until their distribution. The assets may include real estate, movable property, securities, or corporate participations, and they remain consolidated within the foundation while also being protected against external claims.

Participants, bodies, and documents of the asset management foundation
Founding deed

The foundation’s purpose, the rules and conditions of asset management, and the provisions concerning beneficiaries are set out in the founding deed. A minimum asset value may be defined, below which the assets must not fall, which may correspond to the statutory minimum capital requirement, namely 600 million forints. The founding deed is submitted to the court, which registers the asset management foundation. In addition to the founding deed, an investment policy must also be prepared.

Founder

The natural or legal person who establishes the foundation. They provide the initial assets. Their rights include appointing and dismissing the governing body, defining the purpose of the foundation and the method of asset management, and amending the founding deed.

Beneficiary

The founding deed or the foundation body authorized to do so designates those persons who may receive financial benefits from the assets of the foundation in connection with the implementation of the foundation’s purpose. The beneficiary may also be the founder and their family.

Board of Trustees

The board of trustees is the executive body of the asset management foundation. It is responsible for the operation of the foundation and the management of its assets. In the case of a non-public-interest asset management foundation, the board of trustees may consist of a single member, who may simultaneously be the founder, trustee, and beneficiary. The founder may decide to delegate the exercise of the founder’s rights to the board of trustees. This ensures the continuity of the exercise of founder’s rights in the event of the founder’s death or incapacity.

Asset Auditor

The asset auditor supervises the activities of the board of trustees and the compliance with the foundation’s objectives. The position may be held by an auditor, a lawyer, or another person with a clean criminal record and a relevant higher education degree specified in the founding deed.

Supervisory Board

This is not mandatory for asset management foundations that do not serve the public interest.

Statutory auditor

However, it is mandatory to appoint a permanent auditor to audit the asset management foundation.

Tax benefits at a trust foundation

Do I have to pay gift tax?

A deed of disposition is not subject to gift tax and is exempt from gift tax. The exemption applies even if the foundation was registered in another EEA country, provided that it can demonstrate compliance with Hungarian legal requirements.

The distribution of assets must be treated as if the beneficiary had received them directly from the founder; in such cases, a transfer tax may be due.

Double Taxation Agreements and Trust Foundations

Asset management foundations are subject to favorable tax rules in Hungary as well: a low corporate tax rate, opportunities for corporate and personal income tax exemptions, and they also benefit from the favorable provisions of double taxation treaties.

A trust foundation can be an excellent vehicle for consolidating large estates, ensuring professional management and integrity within a European, onshore framework. However, due to high capital requirements and significant operating costs, it is only worthwhile for truly substantial estates and requires careful legal and family governance planning.

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