Foreign Property and Hungarian Tax – 8 countries in detail

The basic rule: where is foreign property taxed?

One of the most settled principles of international tax – based on Article 6 of the OECD Model Convention – is that income from immovable property is taxable in the state where the property is located. So rent from your Spanish flat is taxed primarily in Spain, and rent from a Croatian holiday home in Croatia.

Many people draw the wrong conclusion from this. The fact that it is taxed abroad does not remove your Hungarian filing obligation. If you are a Hungarian tax resident, you must report your worldwide income – even when the final Hungarian tax comes to zero.

1. Buying – what does not happen in Hungary

Let's start with the good news: there is no Hungarian property transfer duty when you buy property abroad. The Hungarian duty act applies to domestic property. The transfer tax (ITP in Spain, real estate transfer tax in Croatia, Grunderwerbsteuer in Austria) is collected by that country at its own rates.

What you do need to plan for:

• A local tax number: NIE in Spain, codice fiscale in Italy, OIB in Croatia. Required everywhere for a purchase.
• Purchase side costs: typically 8–15% of the price (tax, notary, land registry, lawyer), depending on country and region.
• Annual local property tax: in Spain the IBI, roughly 0.4–1.1% of the cadastral value per year. Hungary has no general annual property tax, so this surprises many buyers.

The purchase itself therefore creates no Hungarian tax liability. The Hungarian side enters the picture when the property produces income, or when you acquire it by inheritance.

2. Renting it out – where it gets interesting

If you rent out your foreign property, the rent is taxed in the country where the property sits. In Spain, for example, the rate is 19% for EU residents with deductible costs, and 24% without deductions for non-EU residents.

In Hungary you must report this income and apply the method set out in the relevant double taxation treaty. There are two methods:

Exemption with progression

The foreign income is exempt from Hungarian tax but is taken into account when determining your Hungarian rate. Since Hungarian personal income tax is a flat 15%, progression has no practical effect – so foreign rent typically generates no additional Hungarian tax.

Credit method

The income is taxable in Hungary too, but the tax paid abroad can be credited against the Hungarian tax, within limits. If the foreign rate is higher than the Hungarian 15%, there is usually nothing left to pay; if it is lower, the difference is payable in Hungary.

3. Inheritance – the Hungarian duty question

If you inherit foreign property, you encounter two separate systems.

The foreign side: the inheritance rules and duty of the country where the property is located apply. This varies dramatically – some states treat inheritance as effectively exempt, others levy substantial rates, and the degree of kinship can count differently than in Hungary.

The Hungarian side: as a general rule, Hungarian inheritance duty applies to domestic estates. Property located abroad is typically outside the scope of Hungarian inheritance duty – but that does not mean there is nothing to do. Probate and registration of title follow the rules of the country concerned.

Exemption on inheritance is not the same as exemption on a later sale – see below.

4. Selling – the inherited property trap

If you sell foreign property, the gain is again taxed primarily where the property is located, and the Hungarian reporting obligation still applies.

Points that deserve particular attention – the same logic as for Hungarian property:

• The acquisition value of inherited property is not zero. The value established in probate or for duty purposes is your starting point. If you cannot evidence it, the entire sale price may end up being treated as the tax base.
• Exchange rates matter. Foreign currency transactions must be converted to forints at the statutory rate. A property sold for the same euro amount you paid can still show a gain in forint terms if the forint weakened in the meantime – and that gain can be taxable.
• Evidenced costs are deductible: acquisition value, duty, legal and notary fees, and value-adding improvements.

Austria – closest to home, but the most tightly regulated

For many Hungarians Austria is the obvious choice: a few hours by car, an EU member state, a stable market. Buying is formally straightforward – as an EU citizen you need no special permit – but there is one pitfall that is rarely discussed.

Purchase costs

• Grunderwerbsteuer (property acquisition tax): 3.5%
• Eintragungsgebühr (land registry entry): 1.1%
• Lawyer / notary: 1–3% + 20% VAT
• Estate agent: 3–4% + 20% VAT (4% below €40,000)
• Total: 10–12% of the purchase price

Renting out, and the Hungarian side

Austrian rental income is taxed in Austria at progressive Austrian rates. You must report it in Hungary, but since income taxable abroad under the Hungary–Austria treaty is left out of the Hungarian consolidated tax base, in practice no additional Hungarian tax typically arises.

Spain – the most popular, and the most hidden items

The Costa Blanca, Costa del Sol and the Alicante area have been Hungarian buyers' favourites for years. The process is well trodden, but the cost structure is more complex than in Austria.

Purchase costs

• Resale property: ITP (transfer tax) 6–11%, varying by autonomous community. Andalusia currently applies a reduced 7%.
• New build: 10% VAT (IVA) plus roughly 1.2% AJD (stamp duty)
• Notary, land registry, gestoría: roughly 1–2%
• Lawyer (strongly recommended): around 1%
• Total: 8–15% of the purchase price

You need a NIE number (Número de Identificación de Extranjero) to buy. It is worth starting the application from Hungary through the embassy, since appointments in Spain can take weeks.

Annual running costs

• IBI (local property tax): roughly 0.4–1.1% of the cadastral value per year – €250–600 for a typical Benidorm apartment
• Community fees: €600–1,500 a year
• Waste collection: €50–100

Renting out

As an EU resident the rental tax rate is 19%, and you can deduct costs (maintenance, insurance, IBI, depreciation). Non-EU residents pay 24% with no deductions – something that hit British owners hard after Brexit, but as a Hungarian you fall into the more favourable EU category.

Germany – the 10-year rule makes it a long-term play

Germany tends to be an investment destination rather than a holiday-home market – buyers are often people who work there or who are looking for a stable rental yield.

Purchase costs

• Grunderwerbsteuer: 3.5–6.5% – it varies by federal state (Bundesland). Bavaria and Saxony are at the low end; North Rhine-Westphalia, Brandenburg and Schleswig-Holstein at the high end.
• Notary and land registry: roughly 1.5–2%
• Estate agent (Makler): 3–9%, since 2020 typically split between buyer and seller
• Total: around 10% of the purchase price

Annually you pay Grundsteuer (land tax), which varies by municipality – on the order of €170–200 a year for a 50 m² flat in Stuttgart. If you rent the property out, this can be passed on to the tenant if the lease provides for it.

Croatia – the coastline, and the new 2025 property tax

A classic destination for Hungarian buyers, mainly as a holiday home and for tourist letting. Buying is straightforward; as an EU member state no special permit is needed.

Purchase

• Real estate transfer tax: 3% (on resale property; new builds carry VAT instead)
• Notary: about 1% + VAT · Lawyer: about 1% + VAT
• Deposit (kapara) is typically 10% of the price

Renting out – two separate regimes

For long-term letting, 30% of the rent is tax-free and the remaining 70% is taxed at 12% – an effective rate of roughly 8.4%. On €1,000 monthly rent that is about €84 a month.

For short-term (tourist) letting there is a flat tax set by the municipality per bed. The floor is €19.99 per bed per year – for a six-bed apartment that works out at around €120 a year.

Slovakia – no property acquisition tax at all

The least known advantage on this list: Slovakia has no property transfer tax – it was abolished back in 2005. As a buyer you therefore acquire title considerably more cheaply than in any neighbouring country.

Costs

• Acquisition tax: 0%
• Notary, land registry entry, lawyer: typically a few hundred euros in total
• Annual property tax (daň z nehnuteľností): set by the municipality, generally low

Renting out

Rent from a Slovak property is taxed in Slovakia, even if you are a Hungarian tax resident. This follows from Article 6(1) of the Hungary–Slovakia double taxation treaty (Act C of 1996): income from immovable property is taxable in the state where the property is located.

Romania – no buyer's duty, and no inheritance tax either

Whether for a Transylvanian property, an investment or family ties, Romania offers a favourable tax environment for Hungarian buyers in several respects.

Purchase

• Buyer's acquisition duty: none. In Romania the buyer pays no property acquisition tax – a rarity in European terms.
• Notary fee: roughly 0.5–1.5% of the price
• Land Book registration: around 0.15%
• Total closing costs: typically 3–5% of the price

The seller, however, does pay: income from the sale is taxed at 1% or 3%, withheld by the notary before the transfer deed is authenticated.

Annual tax and letting

The annual building tax (impozit pe clădiri) on residential property is 0.08–0.2% of the assessed value – around €100–400 a year for a typical city apartment. The valuation rules changed on 1 January 2026, so review any new assessment carefully.

Rental income is taxed at 10% after a statutory expense deduction. Importantly, a health insurance contribution (CASS) may also arise on rental income, which can materially increase the real burden – this depends on your income level and personal circumstances.

Serbia – not in the EU, so different rules apply

Serbia is the only non-EU country on our list, and that matters at several points – from acquiring title to information exchange and tax rates.

Acquiring title: reciprocity required

A foreign individual may acquire an apartment or residential building in Serbia on the basis of reciprocity, which in practice works for Hungarian citizens. Agricultural land, however, is subject to considerably stricter restrictions.

Taxes

• Property transfer tax: 2.5% (on resale). New builds carry 10% VAT instead, usually already included in the developer's price.
• Notary and certification fees: roughly 1–2%
• Annual property tax: 0.1–0.4% of assessed value, set by the municipality
• Letting: 20% of gross rent, but costs (maintenance, mortgage interest, management fees) are deductible – with a standard 25% deduction the effective rate is around 15%
• Sale: 15% capital gains tax – but fully exempt after 10 years of ownership

United Kingdom – by far the most expensive entry

Since Brexit the UK is a third country, and non-resident buyers face deliberately higher charges. If you are considering British property, this is the most important section.

The stacking surcharges

UK Stamp Duty Land Tax (SDLT) is banded, and a non-resident Hungarian buyer attracts several surcharges on top:

• Base SDLT: banded, up to 12% on the slice above £1.5 million
• +2% non-resident surcharge – applied to the entire purchase price
• +5% additional dwelling surcharge – which applies if you own another residential property anywhere in the world. Raised from 3% to 5% on 31 October 2024.

Three separate systems

Note that SDLT applies only to England and Northern Ireland. Scotland uses LBTT and Wales uses LTT, with different bands and rates. Always check which part of the UK the property is in.

Letting and selling

Rental income falls under UK income tax, and non-resident landlords are subject to a separate regime (the Non-Resident Landlord Scheme) with its own reporting obligations. On sale, UK Capital Gains Tax arises.

And one item most people overlook: UK property falls within the scope of UK Inheritance Tax, regardless of where you are tax resident. This can be a substantial liability and is worth planning for before you buy.

The eight countries at a glance

Hungary has a double taxation treaty in force with all eight countries, so you never pay full tax twice. The Hungarian filing obligation applies everywhere, though – and since local rates are generally higher than the Hungarian 15%, in practice the foreign tax dominates.

What NAV cannot do for you

The single most important practical point: the draft tax return (eSZJA) prepared by NAV never includes your foreign income. The Hungarian tax authority receives no automatic data about your Spanish rent or the sale of your Croatian holiday home.

That does not mean it stays invisible. Under the Common Reporting Standard (CRS) and the DAC directives, tax authorities in EU and many non-EU countries automatically exchange information about foreign bank accounts and financial assets. If rent is paid into a foreign account, NAV may well learn about it.

Frequently asked questions

Do I owe Hungarian tax on my Spanish holiday home if I do not rent it out?

If it produces no income, no Hungarian tax liability arises. You will still pay the local property tax (IBI), and some countries also levy a deemed income tax on unused property – in Spain this is the non-resident imputed income tax.

What happens if I move abroad?

If your Hungarian tax residency ends, so does worldwide taxation – from then on only Hungarian-source income is taxed here. The change of residency must be documented and reported to NAV.

Will I have to pay in both countries?

Double taxation treaties exist precisely to prevent this. You do not pay full tax twice on the same income – either it is exempt on the Hungarian side, or the foreign tax is credited.

What about income in foreign currency?

All amounts must be converted to forints for the return, at the statutory exchange rate (generally the official MNB rate on the day the income was received).