Changes of the act on duties
On July 22, 2010 the Parliament accepted the legislation proposal no. T/581 on the creation and modification of certain economic and financial acts, which was made public on August 13. 2010. The proposed legislation modifies certain provisions of the Act on Duties with effect of July 1, 2010.
The most important modification is that the inheritance and gift duty on the transfer of property between lineal relatives is abolished. A further favourable change is that the onerous transfer between related parties of quota in a company having real property in Hungary is exempt from duty and so is the presenting of land, agricultural structures and movables and the assignment of rights representing assets between close relatives for the purpose of using farm-transfer subsidies.
Exemption from duty of transfers of property between lineal relatives
As a result of the modifications, duty payment obligation ceases in the case of both inheritance and gifts between lineal relatives. According to the new rules, the exemption also extends to child-parent relationships based on adoption but does not cover inheritance and the receipt of gifts by a spouse, brother or sister, step-child and foster child and step-parent and foster parent. In respect of these relations the Act on Duties maintains the duty rates which were in use before July 1, 2010.
The exemption from duty also covers the duty transactions, which – although already being in progress – were not effectively judged by the Hungarian Tax Authority on July 1, 2010.
A special case of exemption from gift duty
The presenting of land, farms, structures and areas withdrawn from cultivation necessary for agricultural production activities and movables as well as the free-of-charge assignment of rights representing assets to a close relative by certain agricultural producers is-in addition to eligibility for farm-transfer subsidies is exempt from gift duty as well.
The difference in this specific case is that the exemption from duty covers close relatives, which not only includes parents, children and grandchildren but also spouses, brothers and sisters, step-children and foster children and step-parents and foster parents.
Exemption from duty of related parties
As a result of the modification of the Act on Duties, the transfer of quota in a company having real property in Hungary to a related party as defined in the Act on Corporate Tax will be exempt from the duty on quid-pro-quo transfers of property.
According to former rules, duty on quid-pro-quo transfer of property was payable on the transactions even in the case of the direct or indirect acquisition of a 75% quota in companies having real properties in Hungary.
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