When the proposed wealth tax is discussed, most people immediately want to know whether they will be affected and how much tax they may have to pay. However, before calculating the tax itself, several important decisions need to be made. For many affluent families, a wealth tax can serve as an opportunity to assess and rethink their wealth structure, the future of their businesses, and their succession plans.
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Before Calculating Wealth Tax, We Need to Know What Wealth We Actually Have
According to the current
proposal, net wealth exceeding HUF 1 billion may become subject to taxation.
Before anyone starts estimating the amount of tax payable, it is worth
clarifying a few fundamental questions:
- What exactly constitutes the family’s wealth?
- Who owns the individual assets?
- In which countries are the assets located?
- How liquid are the various components of the wealth?
- Who will inherit or manage the assets in the future?
There is, however, very
limited time to prepare. Based on the proposals known so far, the wealth
position existing on 31 December 2026 may already be decisive for
determining the first wealth tax liability.
Calculating Wealth Tax Is More Complex Than It May First Appear
The value of an asset and
its ability to generate cash for tax payments are not the same thing. For
example, a family-owned business worth several billion forints may represent
significant wealth while providing relatively limited liquid funds to its owners.
The situation is very different in the case of a real estate portfolio, a
securities account, or substantial cash reserves.
It also matters whether
the assets are located in Hungary or abroad, whether they consist of majority
or minority shareholdings, or whether trust and foundation structures are
involved. The picture becomes even more complex if family members live in different
countries or if the family's wealth is spread across multiple jurisdictions.
The experts of LeitnerLeitner and LeitnerLaw examine tax and legal issues in a coordinated manner. Our Private Clients & Family Offices practice was established specifically to address the tax and wealth planning needs of private individuals, affluent families, and family-owned structures. We approach wealth planning in the broader context of personal and corporate taxation, wealth preservation, succession planning, and international mobility. Clients also benefit from the experience of the Leitner Group’s international network, which can be particularly relevant for family wealth structures spanning several countries.
Six Important Questions About Wealth Tax Worth Asking Already Today
1. Do We Really Have a Clear Picture of the Family Wealth?
A comprehensive
understanding of the family's assets, ownership arrangements, and future
intentions is the essential starting point for any wealth tax assessment.
2. What Is the Wealth Actually Worth?
Valuing privately held
businesses can be particularly challenging. A company's value may be influenced
not only by its equity, but also by its income-generating capacity, real estate
holdings, and accumulated earnings. In addition to valuation itself, maintaining
appropriate documentation may become increasingly important.
3. Is the Current Ownership Structure Still Appropriate?
The introduction of a
wealth tax may provide an opportunity for families to review their existing
wealth structures. It may be worth reconsidering:
- the separation of operating and investment assets;
- the management of real estate holdings;
- the suitability of a holding company structure;
- ownership ratios among family members; and
- the applicability of trust or foundation arrangements.
At the same time,
creating a new structure alone does not automatically result in tax savings.
4. What Are Our Plans for the Wealth Over the Next Few Years?
The potential impact of a
wealth tax should not be assessed solely on the basis of the current situation.
Equally important are the events expected within the next five to ten years.
For example:
- Will there be a generational transition in the family business?
- Will an external investor be brought in?
- Is relocation abroad being considered?
- Are there plans to acquire additional real estate?
- Will the wealth be reinvested?
- Is the company expected to be sold?
Each of these
developments may significantly affect the family's wealth position and tax
situation.
5. Does the Wealth Have an International Dimension?
For family wealth
structures spanning multiple countries, it may be particularly important to
assess tax residency, the application of international tax treaties, and the
taxing rights of the countries involved.
6. How Will the Wealth Tax Be Financed?
This is perhaps the most
practical question. A business or real estate portfolio worth several billion
forints does not necessarily provide the same amount of freely available cash.
Financing a wealth tax liability may require:
- dividend distributions;
- the sale of certain assets; or
- a reassessment of the family's liquidity strategy.
Many people focus
exclusively on the amount of tax that may become payable under the expected
rules. Yet the key task today is not the minimization of tax, but rather the
comprehensive mapping and valuation of family wealth and the establishment of a
structure aligned with long-term objectives.
The real question is
therefore not only how much wealth tax may be due at the end of 2026, but also
whether the family's wealth, business interests, and ownership structures will
be adequately prepared for the challenges of the coming decade.
Wealth
Tax Planning in the Private Clients & Family Office Business Unit
