Inheriting real estate in Hungary – What investors need to know
Hungary rises in contrast to Germany no inheritance or gift tax in direct relationships – an interesting advantage for German investors who want to pass on Hungarian real estate assets within the family. But be careful: If you are a tax resident in Germany, you are subject to your taxes World assets the German inheritance tax.
Difference between unlimited and limited tax liability
Unlimited tax liability (Section 2 Paragraph 1 No. 1 ErbStG)
- Regardless of the location of the property or company
- Hungarian real estate and Kft shares are also taxed
- Allowances applicable under German law (e.g. €400,000 for children)
Limited tax liability (Section 2 Paragraph 1 No. 3 ErbStG)
- Just that German assets is taxable
- Hungarian real estate or company shares are not affected
- Allowances do not apply or only apply proportionately
Comparison table: Tax liability for inheritance/donations
| criterion | Unlimited tax liability | Limited tax liability |
|---|---|---|
| Residence DE (testator or purchaser) | Yes | No |
| Taxation of global assets | Yes | No |
| Hungarian property is taxed | Yes | No |
| Allowances under German law | Yes | Only limited |
Direct land register shares vs. company shares (kft)
- Direct real estate shares, registered in the land register
- Shares in a Hungarian Kft (corporation, similar to GmbH)
Comparison table: inheritance or gift
| aspect | Land register share | Kft share |
|---|---|---|
| form of transmission | Land register transfer | Notarized share purchase agreement & register entry |
| Hungarian tax liability | None (in direct line) | No |
| German tax liability (with unlimited obligation) | Yes | Yes |
| Valuation | Market value of the property | Enterprise value of the Kft |
| Allowances (e.g. child) | Yes, up to €400,000 | Yes, up to €400,000 |
Design options for tax avoidance
1. Changing your place of residence is not automatically tax-free
- German assets (e.g. a rented apartment in Berlin) remain taxable
- Hungarian assets (real estate or Kft shares) can be exempt from German inheritance tax
2. Plan consciously to make use of the limited tax liability
3. Option for unlimited tax liability (Section 2 Para. 3 ErbStG)
4. Staggered donation with allowances
Example: Inheritance with mixed assets
- Person A has lived in Hungary for 5 years
- A still owns a rented apartment in Berlin → subject to limited tax in Germany
- A bequeaths his shareholding in a Hungarian Kft or his Hungarian apartment to child B (also resident in Hungary)
Result:
- The Berlin apartment is subject to German inheritance tax
- The Hungarian real estate or Kft holding not – it remains tax-free in Germany
Conclusion
Even if Hungary itself does not levy inheritance or gift tax directly, it remains for German investors German tax liability is a decisive factor. Anyone who structures their participation in a Hungarian property or Kft in a timely manner and plans their residence accordingly can achieve significant tax advantages or avoid becoming subject to full tax liability.
As of: October 2025
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