Property Guide – Hungary
January 2024
This is a general guide only and not designed to cover every scenario and the nuances of property VAT. Specific advice according to each transaction or supply should always be sought from a VAT specialist.
| Supply | Commercial/non-residential | Residential | Charitable |
|---|---|---|---|
| Freehold Sale (sale of legal title) | S/R if property is new (2 years old or less). S/R for building land. EX if property is not new, but can Opt to Tax making · S/R for non-VAT subjects customer · R/C for VAT subject customers (Option to Tax has no effect on residential properties). S/R in case of serial sales (if the fourth or more building, land, or a property under construction, or a new property is sold within 2 calendar years). | S/R if property is new (2 years old or less). S/R for building land. R/R if property is new (2 years old or less) and area is less than 150 m2 (flat) / 300 m2 (house) and if the building permit became final on December 31, 2024 at the latest, or its construction has been notified by this date EX if property is not new, but can Opt to Tax making all property sales S/R (Option also applies on sale of commercial/non-residential property). | no special rules, general rules applied, see previous columns |
| Leases | EX, but S/R if Option to Tax by landlord. Option to Tax has no effect on residential properties | EX, but S/R if Option to Tax by landlord (Option also applies on sale of commercial/non-residential property). S/R in all cases in regard to the following properties: Commercial accommodation, Property for parking purposes, Rental of machines and other equipment permanently connected to real estate (E.g. utilities, petrol station). | no special rules, general rules applied, see previous columns |
| Transfer/sale of property including tenants and where leases continued by buyer. | no special rules, see Sale | no special rules, see Sale | no special rules, general rules applied, see previous columns |
| Rent | no special rules, see leases | no special rules, see leases | no special rules, general rules applied, see previous columns |
| Construction services | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). Other cases S/R. | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). Other cases S/R. | no special rules, general rules applied, see previous columns |
| Conversion services | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). In all other cases S/R. | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). In all other cases S/R. | no special rules, general rules applied, see previous columns |
| Refurbishment services | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). In all other cases S/R. | Domestic R/C applies if works fall under building permit or notification to authorities and customer is VAT registered. Then all subcontractors shall use domestic R/C. This means the contactor self-charges VAT (S/R). In all other cases S/R. | no special rules, general rules applied, see previous columns |
| Materials only for building | S/R | S/R | no special rules, general rules applied, see previous columns |
| Overseas suppliers of property related services e.g. architect, surveyor | R/C if to a HU established VAT registered customer, but otherwise would lead to a HU VAT registration. | R/C if to a HU established VAT registered customer, but otherwise would lead to a HU VAT registration. | no special rules, general rules applied, see previous columns |
Taxable with right to recover related VAT on expenditure
Standard rate (“S/R”) = 27%
Reduced rate (“R/R”) = 5%
Zero-rate (“Z/R”) = 0%
Reverse charge (“R/C”) = 27%
Exemption, with no right to recover VAT on expenditure
Exempt (“EX”) = 0%
Option to Tax/other exceptions
An Option to Tax is a decision taken by each entity holding or intending to hold an interest in land or property. It requires formal notification to Hungarian Tax Office. It means that supplies that are ordinarily exempt from VAT become taxable at the standard rate, which in turn means that VAT is charged to buyers or tenants. It is a common decision for commercial property owners as it allows VAT on related expenditure to be reclaimed from the tax office.
