A New era in fiduciary asset management – the institution remains, the tax rules tighten

On 17 July 2026, the Government submitted to Parliament a bill that, as of 31 August 2026, will reshape the personal income tax rules governing fiduciary asset management (“bizalmi vagyonkezelés” in Hungarian) and private foundations. The background to this is that Hungary undertook to review these rules as a condition of the EU recovery funds.

The key message is reassuring: the legal institution is not being abolished, nor does it become subject to tax as a general rule. The bill amends the personal income tax rules only; the exemptions arising under the Corporate Income Tax Act and the Act on Duties remain in place, and the contribution of assets continues to be tax-free. The real change occurs upon the distribution of the assets: the well-known “five-year rule” is abolished, under which the increase in asset value resulting from revaluation could be received tax-free by the beneficiary after five years.

The transfer of wealth between generations has been deliberately left untouched by the legislator: upon the death of the settlor, the distribution of the assets remains fully tax-exempt. The most significant novelty of the bill is the mandatory tax authority audit. The first wave targets structures created before 12 September 2023, and as of 1 January 2028 every fiduciary asset management arrangement and private foundation can expect to be audited. The audit goes beyond a formal review: the National Tax and Customs Administration (NAV) may also examine the genuine purpose of the settlement of assets, the circumstances of the relationship with the adviser and the attorney, and the timing between the settlement of assets and the first capital distribution. Terminating the structure is no way out: in such cases the audit is conducted against the settlor.

As the deadline approaches, many will seek to carry out a settlement of assets before 31 August in order to secure the more favourable rules; this, however, is not optimal in every case, as it is clear from the Government's programme that the next major step will be the introduction of a wealth tax, and assets revalued now may later result in a higher wealth tax burden.