Hungary implements tax reforms and shows budget improvement

Hungary is implementing significant fiscal and tax reforms aimed at closing loopholes used for tax avoidance. A new tax package, approved by Parliament, targets trust asset management, public interest foundations, and tax liabilities related to monument-protected real estate.

Specifically, starting August 31, 2026, the 15 percent personal income tax exemption for the appreciation of assets held in trust management will be abolished. While the tax point remains at the time of asset disposal, the ability to move unrealized gains into these structures tax-free will be restricted. The National Tax and Customs Administration (NAV) is expected to increase its oversight, launching specific audit programs for older structures.

Parallel to these tax changes, recent July fiscal data indicates an improving budgetary situation. Despite previous political rhetoric regarding potential state bankruptcy, the budget deficit has shown continuous improvement throughout the year. Financial experts note that high deficits at the start of a year are common and often improve as the fiscal cycle progresses, providing a more stable outlook for foreign investors and the European Union.