Hungary offers capital gains tax amnesty for shares that previously didn't qualify

Local contact

EY Global

18 Dec 2023
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Hungary
  • The latest year-end tax legislation enacted in Hungary includes a one-time amnesty for capital gains on shares in subsidiaries that had not previously opted in to the Hungarian capital gains exemption regime.
  • The "price of amnesty" would be a one-time cash tax payment amounting to 1.8% of the gains (if any) accumulated between the original acquisition date and 31 December 2023.

Newly enacted tax legislation in Hungary includes a one-time amnesty for capital gains on shares in subsidiaries that had not previously opted in to the Hungarian capital gains exemption regime.


The Hungarian capital gains exemption regime is optional. Opting in requires reporting the acquisition of shares to the tax authority within 75 days by submitting the appropriate electronic form. Missing the deadline means that the respective participation would not be eligible for the capital gains exemption in the case of future disposal.

Under the regime, assuming that the election was made within the 75-day period, capital gains from the sale and in-kind contribution of shares is exempt after a one-year holding period. The current regime does not apply any minimum shareholding requirement.

There could be several reasons why a multinational with holding functions in Hungary did not opt in to the capital gains exemption regime for certain participations — e.g., the regime was not available at the time of the acquisition or the participation percentage was below certain thresholds that used to apply.

Details of the one-time amnesty

Under the year-end tax bill, taxpayers with shares that currently do not qualify for the exemption now have the opportunity to make the election by submitting the respective form with the tax authority, As a result, their shares would become eligible for the regime. The deemed election date would be 31 December 2023. The conditions of the one-time amnesty are as follows:

  • 20% of the positive difference between the fair market value and the book value of the shares on 31 December 2023 would be taxed at 9%; i.e., the cost of amnesty is a cash tax payment in an amount of 1.8% of the capital gains (if any) until 31 December 2023
  • The filing could be made until the filing deadline of the corporate income tax return of 2023 (i.e., 31 May 2024 for calendar-year taxpayers)
  • Third-party valuation will be required

The final legislation, as enacted, offers the amnesty for every company in Hungary, whether or not the group is subject to the Organisation for Economic Co-operation and Development's (OECD's) Pillar Two.

Key takeaway: This one-time opportunity is available for all Hungarian companies with shares not currently eligible for capital gains exemption. The respective considerations should be analyzed before making a decision on the election.


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), Hungarian Tax Desk, New York
  • Richard Kocsis
Ernst & Young Consulting Ltd., Hungary (Budapest)
  • Miklos Santa, Hungary ITTS
  • Andras Modos, Hungary ITTS

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.