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In a recent statement, the Hungarian Ministry of National Economy, through the National Tax and Customs Administration (NAV), clarified key points regarding inheritance tax obligations related to property transfers between heirs during probate procedures.
According to the regulations under Act XCIII of 1990 on Duties (hereafter referred to as the Duty Act) and Act XXXVIII of 2010 on Probate Proceedings (Probate Act), if an heir involved in the probate process transfers all or part of the inherited estate—acquired via inheritance, deathbed gifts, universal succession, or trust property established by testament—to another heir, a reversionary heir, or an estate creditor, such declarations are formalized by a notary. The notary will then decide whether to approve the settlement, and if approved, transfer the estate accordingly.
Significantly, the Duty Act stipulates that if an heir voluntarily transfers part or all of their inheritance during the probate process to another heir without compensation, no inheritance tax can be levied on the transferring party for the transferred portion. Instead, the receiving heir is liable for inheritance tax as if they had inherited directly from the deceased.
In contrast, if the transfer is made in exchange for compensation, inheritance tax applies to the transferring heir, and the receiving heir must pay transfer duty as a consideration-based asset acquisition.
It is also important to note that if the transferred inheritance is given to someone who is not another heir of the deceased, the preferential provisions allowing exemption from inheritance tax do not apply. In such cases, the transfer is subject to inheritance tax or, if applicable, gift tax regulations.
Moreover, in scenarios where the transfer is a gift between direct relatives (e.g., parent-child), personal tax exemptions may apply, potentially eliminating any gift tax liability.
The recent guidance explicitly states that the tax rulings outlined in document 2012/44 do not apply under these circumstances.
This clarification by Hungary’s National Tax and Customs Administration aims to streamline inheritance tax compliance and provide greater certainty for heirs navigating estate transfers.
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