Capital Gains Taxation in Hungary
In Hungary, capital gains taxation is governed by the Personal Income Tax Act of 1995 and the Corporate Income Tax Act of 1996. These laws define capital gains as the profit realized from the sale or disposal of certain assets, including:
- Real estate properties
- Stocks and securities
- Bonds and debentures
- Business assets
Calculating Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula for calculating capital gains is as follows:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale (e.g., brokerage fees, legal fees) and any improvements made to the asset during ownership.
Tax Rates
Capital gains are taxed at a flat rate of 15% for individuals and 9% for corporations. However, certain capital gains may qualify for exemptions or preferential tax treatment under specific provisions of the tax laws.
Legal Framework
The following articles of the Hungarian tax laws outline the taxation of capital gains:
- Personal Income Tax Act of 1995:
- Article 6(1)(b): Defines capital gains as income subject to personal income tax.
- Article 10(1)(a): Specifies the flat tax rate of 15% on capital gains.
- Corporate Income Tax Act of 1996:
- Article 7(1)(a): Defines capital gains as income subject to corporate income tax.
- Article 10(1): Specifies the flat tax rate of 9% on capital gains.
Policy Objectives
The Hungarian capital gains tax system aims to generate revenue for the government while also encouraging investment and economic growth. The flat tax rates provide simplicity and certainty for taxpayers, while the exemptions and preferential treatments incentivize certain types of investments.
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