Hungary proposes an exit tax on individuals ending their Hungarian tax residence

On 27 October 2026, the Government submitted Bill T/927 on the amendment of certain tax and related acts (the “Bill”) to Parliament, presented by Minister of Finance András Kármán. Among a wide range of measures, the Bill introduces an exit tax: from 1 January 2027, long-term Hungarian tax residents with significant financial assets would be taxed on unrealised gains when they move their tax residence abroad.

In this Client Alert, the Wolf Theiss Tax team outlines who would be affected, how the tax would be calculated and what affected individuals should consider.

The new rules at a glance

The exit tax would be introduced into Act CXVII of 1995 on Personal Income Tax (the “PIT Act”). According to the explanatory memorandum, the goal is to curb transfers of wealth abroad that reduce Hungarian taxing rights, following the model of several EU Member States.

In short, an individual who gives up Hungarian tax residence is treated as if they had sold their assets on the day before their residence ends and is taxed on the gain accrued until that point. Payment is automatically deferred without interest where the individual moves to another EU or EEA state, but becomes due without deferral on a move to any other country.

Who is affected?

Based on the Bill, three conditions must all be met. First, the individual must have been a Hungarian tax resident in at least five of the ten tax years preceding the end of their residence. Second, on the day before their residence ends, either the combined fair market value of their “residence change assets” must exceed HUF 500 million or they must hold a participation of at least 20% with a fair market value of at least HUF 250 million. Third, as a result of the change of residence, Hungary’s right to tax a later disposal of the assets must cease or become limited.

Assets that Hungary can continue to tax to the same extent after departure, as well as assets belonging to the individual’s Hungarian fixed base, fall outside the charge. Whether a given holding falls within the charge will therefore depend significantly on the applicable double tax treaty.

Which assets are covered?

For exit tax purposes, the “residence change assets” should be considered. This category includes securities within the meaning of the PIT Act, such as shares, business quotas, investment fund units and bonds, as well as participations that are not securities in entities established under foreign law, whether or not they have legal personality, including membership, ownership and profit-sharing rights. Options and similar rights to acquire, subscribe for, convert or transfer such assets and positions in related derivatives, are also covered. The same applies to claims for contingent or deferred consideration, such as earn-outs and deferred purchase prices and to crypto-assets. Long-term investment accounts (TBSZ), voluntary pension savings accounts (NYESZ) and residual rights under life and pension insurance contracts are also included.

Cash, payment account balances and bank deposits are not covered. Assets whose actual sale would be tax-exempt or would not give rise to income under the PIT Act, are also disregarded, although this carve-out does not extend to TBSZ, NYESZ and insurance assets.

How would the tax be calculated?

The gain is calculated under the ordinary PIT rules that would apply to a sale, with the fair market value on the day before residence ends treated as the proceeds. That same day is also when the income is deemed to arise. The calculation is made asset by asset and only positive gains count, so a loss on one asset cannot be set off against a gain on another.

When calculating the tax base, acquisition costs and deductible expenses must be evidenced. Special rules apply to certain savings products. TBSZ income is calculated as if the lock-in period had been broken, but without the preferential TBSZ rates, while NYESZ accounts and insurance products are valued as of the day before departure. The calculation itself does not terminate any of these contracts and does not trigger the repayment obligations that would otherwise apply to NYESZ accounts and pension insurance.

The Bill does not introduce a separate tax rate. The gain is computed under the ordinary capital gains rules and the general 15% PIT rate applies. The income and the tax must be declared in the PIT return for the tax year of departure, together with an asset-by-asset statement.

Deferral of payment

For individuals moving to another EU or EEA state, the deferral applies automatically by operation of law, free of interest. The only condition is that the return and the asset-by-asset statement are filed on time. The tax authority may require security only where later collection would be at risk, considering factors such as the individual’s enforceable assets in Hungary and abroad, the possibility of recovery cooperation with the destination state, their past tax compliance and their ability to pay.

The deferral has no time limit but is subject to ongoing reporting obligations. Each year, by 20 May, the individual must report their place of residence, their tax residence and whether they still own the residence change assets. Any event ending the deferral must be notified within 30 days. The deferral ends, for the part concerned, if the asset is realised or given away free of charge in whole or in part if dividends, capital withdrawals or other distributions paid on a participation after departure together exceed 25% of its fair market value at departure, if the individual becomes resident in a state outside the EU/EEA or if the reporting obligations are still not met within a further period of at least 30 days set by the tax authority.

Special rules apply to TBSZ, NYESZ and insurance products. Transactions within these products, such as selling and reinvesting the financial assets held in a TBSZ or NYESZ account or the expiry of the TBSZ lock-in period, do not in themselves end the deferral. Instead, the deferral ends proportionately when money or other value is paid out or otherwise becomes available to the individual.

The Bill also contains certain safeguards. If an asset is worth less when it is sold or given away than it was at departure, the tax is recalculated, provided that the new state of residence does not take the decline into account. In addition, the deferred tax lapses altogether if the individual becomes a Hungarian resident again while still holding the asset and on the individual’s death.

If the individual moves to a state outside the EU/EEA, there is no deferral and the tax must be paid by the filing deadline of the PIT return for the year of departure.

Avoiding double taxation

Where a later disposal remains taxable in Hungary, the acquisition cost of the asset may be increased in proportion to the exit tax actually paid, capped at its fair market value at departure. Conversely, individuals who become Hungarian residents may use the value applied by their former state of residence for its own exit tax as their acquisition cost, unless it obviously departs from fair market value.

Trusts and private foundations

The Bill also extends the exit regime to settlors, founders and joining persons of Hungarian trusts (bizalmi vagyonkezelés) and private foundations. The exit charge on the portion of assets attributable to the individual covers previously untaxed recorded value increases relating to their contribution, the positive difference between the fair market value and the book value of the underlying assets and yield accumulated until departure that has not previously been taxed. This attributable portion also counts towards the HUF 500 million threshold.

Trustees and foundations will need to keep separate records for each of the individuals mentioned above on of these amounts and of the tax determined and paid. Reinvestment within the trust or foundation does not end the deferral. However, distributions from the attributable portion, termination of the structure or a transfer of the assets to another trust or foundation (unless it operates in an EU/EEA state) will trigger payment.

When would the new rules apply?

The exit tax provisions are scheduled to enter into force on 1 January 2027 and we have not identified any transitional provision for them in the Bill. On the current text, the exit tax would therefore apply where tax residence ceases on or after that date. The Bill is still at an early stage of the parliamentary process and its text may change before adoption.

The same package also tightens the abuse-of-rights rules in the Act on the Rules of Taxation, targeting arrangements without genuine economic substance that are carried out primarily to obtain a tax advantage, expressly including the deferral of payment obligations. In addition, under a new provision of the Act on the Code of Tax Administration, where evidence uncovered in a tax audit suggests that an arrangement may be abusive, it would be for the taxpayer to prove that it was justified by genuine economic, business or other reasons and that the chosen structure is consistent with arm’s length practice. On the current text, these rules would enter into force on the day after the Bill is promulgated, i.e. before the exit tax itself. They are therefore relevant to any restructuring carried out with the exit tax in mind.

What should affected individuals consider now?

Potentially affected individuals should review whether they or members of their family, could meet the residence-history and value thresholds, bearing in mind that holdings through trusts and private foundations also count. Where a relocation is planned, its timing, the destination state (EU/EEA or not) and the relevant tax treaty should be assessed, bearing in mind that tax residence is determined under domestic law and treaty tie-breaker rules.

Documentation of acquisition costs and expenses should be gathered for each asset, as unevidenced costs will be disregarded and valuation support should be obtained for unlisted participations, earn-out claims and crypto-assets. Trustees and foundations should check whether their records allow assets and yields to be attributed to each settlor or founder. Finally, any pre-departure restructuring should be approached with caution in light of the strengthened abuse-of-rights rules.

We will monitor the legislative process and report on any changes to the final text. The Wolf Theiss Tax team is available to discuss how the proposed rules may affect you.