New Hungarian VAT tax on Sale of Residential Units

Budapest, 19 February 2021

Starting with 2021, a residential unit to be built or existing in a multi unit residential building with a total net floor space not exceeding 150 square metres will fall under a 5% tax rate, except if it is located in a so-called ‘rust zone’. In the latter case, the Hungarian legislation had already introduced a reduced rate on 2020 in order to promote the renewal of interim, former industrial areas of cities.

In addition, the 5% tax rate will be applicable to single-unit residential buildings (detached houses) with a total net floor space not exceeding 300 square metres. According to the VAT regulations, a residential property qualifies as “new” prior to the issuance of its first occupancy permit, or if the period between the date of the occupancy permit and the sale is shorter than two years.