How much tax do I have to pay on a succession?
Last update: 10/7/2012
The rules governing payment of inheritance tax are defined by the Act on Duties. This Act differentiates three groups of heirs (Group 1 are the spouse, and stepchild or foster child, step parent or foster parent of the testator) and various tax rules relate to residential properties and assets that are subject to other inheritance tax rules. Inheritance tax can be imposed between the lowest 2.5% value (that must be paid for residential properties worth up to 18 million HUF) and the highest 40% value (that relates to assets in inherited by heirs belonging to the 3rd group, except in the case of residential properties where a lower tax can be applied).
Heirs belonging to the 1st group are exempt from inheritance tax up to the 20 million HuF limit. The lineal relatives of the testator – including kinship based on adoption – are fully exempt from inheritance tax regardless of the value of inherited property.
How much are death duties?
The taxation rules on estates acquired through succession are governed by the Act XCIII of 1990 on duties – Illetéktörvény (ITV). Several tax bands apply to heirs, depending on their degree of kinship to the deceased or lack of kinship.
Category I heirs are exempt from inheritance tax up to 20 million HUF. Recent tax changes have been introduced in favour of direct ascendants and descendants of the deceased – including parentage based on adoption: these heirs are exempt from inheritance tax without any limit.
The law on inheritance tax distinguishes between three different categories of heirs: category I consists of the spouse, wards/adopted children and the foster parents/step parents of the deceased. Category II consists of brothers/sisters of the deceased. Category III consists of the other heirs not mentioned above.
Taxation category I
up to 18.000.000 HUF 11 %
up to 35.000.000 HUF, for the portion in excess of 18.000.000 HUF 15 %
for the part in excess of 35.000.000 HUF 21 %
Tax band II
up to 18,000,000 HUF 15%
up to 35,000,000 HUF, for the proportion in excess of 18,000,000 HUF 21%,
for the part in excess of 35,000,000 HUF 30%
Tax band III
up to 18,000,000 HUF 21%
up to 35,000,000 HUF, for the proportion in excess of 18,000,000 HUF 30%, for the proportion in excess of 35,000,000 HUF 40%
For succession of residential real estate special duty rates apply in the same category and value proportions as above: category I – 2.5%, 6%, 11%; category II – 6%, 8%, 15%; category III – 8%, 12% and 21%.
Concerning foreign inheritance, it can be subject to succession duties in Hungary if the property is situated in Hungary, irrespective of the domicile or the nationality of the deceased or the beneficiary. If an heir with Hungarian nationality or residence acquires a property through succession in another country, where the acquisition is free of taxation succession duty payment becomes due in Hungary (§ 2(1) ITV).
For more detailed information please see the text of the law on duties.
Can the estate be subject to taxation in one or more Member States? Are there double taxation agreements?
Hungary signed double taxation agreements with several EU Member States to avoid the problem of double taxation. The list of these agreements can be found on the site of the Ministry of Foreign Affairs
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Successions in Hungary
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