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Bill seeks to give tax breaks to property investors

A Fidesz MP on Wednesday submitted to Parliament a bill that seeks to create a new form of business for property investors that would be exempt from certain taxes.

“Regulated property investment companies”, called by its Hungarian acronym "szit" in the text of the bill, would be exempt from the corporate tax and the local business tax, as would any of their project companies.

But it would have to pay 90% of its profit from property development and management activities to shareholders as dividend, which would be taxed.

Companies eligible to adopt the form under the bill must be public companies limited by shares and rent or manage their own property in Hungary.

They must have startup capital of at least HUF 10 billion and their shares must only consist of common stock that has nominal value of no less than HUF 10,000 apiece.

Property, either directly or indirectly owned by the companies, must account for at least 70% of total assets.

Insurers' and lenders' ownership stakes and voting rights in “szits” would be limited to 10%.

The bill is designed to make Hungary a financial services center for the Central European region.