Nonresidents are taxed only on their Hungarian-sourced income. Married couples are taxed separately.

Income Tax

Income tax is levied at a flat rate of 15% on several categories of aggregated income, including:

1. Income from independent business activities
2. Income from dependent activities (e.g., employment income)
3. Other income

Rental Income

Rental income is taxed at a flat rate of 15%. The taxable income can be computed by either:

• Deducting expenses actually incurred and documented in the renting process, such as lighting, maintenance, administrative costs, etc.
• Deducting a 10% notional deduction from the gross income (10% expense ratio).

Capital Gains

Net capital gains realized by nonresident individuals on the sale of real estate are taxed at a flat rate of 15%. Deductible expenses include acquisition costs and related expenses, improvement costs, and costs of transferring the property. If the deductible expenses are not documented and if the acquisition costs are not substantiated, the 15% rate will be applied to 25% of the gross proceeds.

The taxable gain is reduced by 10% every year after the fifth year, so that in the fifteenth year after acquisition, the taxable gain is reduced to zero (i.e., 10% reduction in the 6th year after the year of acquisition, 20% in the 7th year, 30% in the 8th year, 40% in the 9th year, 50% in the 10th year, etc.).Corporate Taxation

Income Tax

Corporate tax is levied at a flat rate of 9%. Income-generating expenses and operating expenses are deductible when computing the taxable income.

Buying and Selling Costs

Cost Component	Percentage of Property Value	Who Pays?
Property Transfer Tax	2-4%	Buyer
Agent Fee (Buyer)	3-5% (+27% VAT)	Buyer
Agent Fee (Seller)	3-5% (+27% VAT)	Seller
Legal Fees	1-5%	Buyer
Notary Fees	1.2% (+12.50% VAT)	Buyer
Roundtrip Transaction Cost	12.14%	Buyer & Seller
Source: Global Property Guide, Deloitte

Property Holding Tax

Note that the local government may or may not levy such taxes, and also that the rates vary for each municipality. This may be an important factor to consider when choosing a property.

Building Tax

The building tax may be imposed by the local government, payable by the property owner each year. The rates and the tax base vary from each locality/municipality, subject to:

• A maximum of HUF 1,100 (€3.60) on a per square metre basis or
• A maximum of 3.6% on the market value of the building

Land Tax

Land tax may be levied on idle land on the portion classified as a "downtown area" by the local government council. The council either levies the tax as:

• Per square metre of the plot at the maximum rate of HUF 200 (€0.65) per sq. m., or
• On the adjusted market value of the property, in which case the maximum tax rate is set at 3%. Adjusted market value is generally 50% of the market value of the property.