The most significant changes which apply to assets acquired or proceedings commenced after 1 January 1997 are the following:

1. According to the amendment regarding the "indirect exchange of residential real estate", the sale of only one residential property can be offset against a future purchase of residential property, contrary to the previous rule which allowed several earlier purchases to be offset against future purchases.

2. Companies carrying out financial leasing of real estate as their main activity will now receive the same allowance as other enterprises falling under the allowance (real estate funds and entrepreneurs whose main activity is the sale of real estate), that is, a 2% duty will be payable on the market value of any real estate obtained by them regardless of the purpose of the real estate.

3. A company that is part of a group receiving the allowance must be proven by the certificate of the State Securities and Stock Exchange Supervision, the relevant Chamber of Commerce, the State Banking Supervision or the Hungarian Leasing Association.

4. In addition to companies carrying out the sale of motor vehicles, companies carrying out the leasing of motor vehicles as their main activity will be exempt from paying stamp duty.

5. In the case of the transfer of rights with a material value for a defined term, the basis of the duty is the multiple of the value for one year and the number of defined years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you require any further information on Hungary, please call Peter Gerendasi at Price Waterhouse, Budapest: tel: ++ 36 1 269 6910 fax: ++ 36 1 269 6938
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