In brief: Three seemingly unrelated areas have simultaneously come under the tax authority’s spotlight: fiduciary asset management (trust structures), personal income tax exemptions for mothers, and certified energy savings. What they have in common is that all three involve either a new tax incentive or a relatively new legal framework where the tax benefit is attached to a specific legal form, while the tax authority increasingly examines the actual economic substance behind that form.
Why These Three Areas?
The selection is neither arbitrary nor speculative. Two public documents clearly identify all three areas.
The first is the summer tax package. The act adopted from Bill No. T/387, related to the implementation of Hungary’s Recovery and Resilience Plan, introduced a new Section 114 into the Personal Income Tax Act (Szja Act). This provision explicitly requires the tax authority to examine fiduciary asset management structures and private foundations.
The second is the NAV Audit Plan for 2026. The plan specifically states that increased attention must be paid to taxpayers engaging in abusive practices related to family policy measures. It also highlights that, in addition to taxation, government-directed programs affect budget revenues, specifically mentioning both the Rural Home Renovation Program and the Certified Energy Savings (HEM) scheme.
These three topics are therefore different manifestations of the same underlying principle. In each case, the law provides a legitimate benefit designed to support a specific policy objective, where the tax advantage is linked to a particular legal structure, income category, or transaction type. In each case, however, the fundamental question remains the same: does genuine economic substance exist behind the legal form?
Where legal institutions are new, market practice often develops more quickly than administrative routine. As a result, mistakes frequently occur, even in good faith.
Let’s examine all three areas based on the current legal framework and consider the practical steps taxpayers should take now. We discuss these issues not merely because the rules are new, but because many of our clients are already involved in one or more of these arrangements and deserve to know what to expect.
1. Fiduciary Asset Management: Mandatory Screening Is No Longer a Proposal, It Is Now the Law
The legislative changes affecting fiduciary asset management structures and private foundations form part of Hungary’s commitments related to EU Recovery Fund requirements. The reform has a dual purpose:
- Going forward, it abolishes tax-free asset revaluation.
- For existing structures, it introduces mandatory tax authority reviews.
What Does the Mandatory Audit Cover?
Under the new Section 114 of the Personal Income Tax Act, the tax authority must conduct reviews of assets held by fiduciary asset managers and private foundations from 31 August 2026 onward.
The reviews will take place in two phases:
- Assets managed by fiduciary asset managers registered before 12 September 2023 will be reviewed first.
- From 1 January 2028, the tax authority may review all managed assets falling within the statutory limitation period.
Even terminated structures are not exempt. In such cases, the tax authority may conduct the review against the settlor, founder, or any party that subsequently joined the structure.
This approach is unusual because the tax authority is not determining its own audit priorities. Instead, Parliament has mandated the audits directly through legislation.
For affected taxpayers, however, there is one advantage: both the existence of the audits and their expected focus areas are known in advance, allowing adequate preparation.
Tax Audit or Compliance Review?
For affected taxpayers, this may be the most important practical question, and the legislation provides no explicit answer.
Because the law does not create a special procedure for these reviews, the NAV remains free to choose the procedural framework. The distinction is significant:
- A compliance review cannot establish a tax deficiency. Missing documentation typically results only in administrative penalties.
- A tax audit, however, may establish tax arrears and create a formally closed audit period.
In practice, once an audit authorization letter has been delivered, taxpayers generally lose the opportunity to correct returns through self-revision for the audited tax type and period.
Therefore, anyone receiving an audit notice should immediately determine which procedure is being applied, as this will largely define the available options for voluntary correction.
Which Rules Apply to Which Structures?
| Date of Asset Contribution | Conditions for Tax-Free Distribution |
|---|---|
| Before 12 September 2023 | Distribution of contributed assets (excluding generated returns) remains tax-free without a waiting period under the transitional rules of Sections 105 and 107 of the Personal Income Tax Act. |
| Between 12 September 2023 and 30 August 2026 | Revalued assets may be distributed tax-free only after a five-year holding period. |
| From 31 August 2026 | Tax-free revaluation is abolished and replaced by the asset appreciation framework of Section 65/C, involving tax deferral and exemption criteria linked to the identity of distributed assets. |
Importantly, the legislator did not retroactively withdraw previously acquired tax benefits.
As a result, the NAV is required to review first precisely those structures that benefited from the most favorable historical rules.
The issue is therefore not retroactive legislation. The real question is whether the structure had a genuine economic or family purpose and whether effective control over the transferred assets was actually exercised by the fiduciary asset manager.
What Are the Consequences?
It is important to distinguish between two different mechanisms.
If the five-year holding requirement is not met, the asset appreciation gained on contribution becomes taxable as a dividend at the time of distribution. This is simply the statutory mechanism prescribed by law.
However, if the tax authority concludes that the structure was created solely for the purpose of obtaining a tax advantage, it may deny the tax benefit altogether based on the principles of proper exercise of rights and economic substance over form.
These are two fundamentally different situations, and they require different lines of defence.
Where Will a Fiduciary Asset Management Case Be Won or Lost in Practice?
The answer is documentation.
In the case of licensed, professional fiduciary asset managers, the supervised nature of the business generally produces a clear documentary trail through resolutions, reports, beneficiary communications, and other governance records.
In contrast, fiduciary arrangements established within families or among friends and operated on an occasional basis often lack this documentary evidence. This is usually not because the arrangement lacked a genuine purpose, but because no one anticipated that the underlying intentions and decisions might one day need to be proven.
For this reason, the quality and completeness of contemporaneous documentation may ultimately determine the outcome of an audit more than the structure itself.
2. Three-Child Mothers’ Tax Exemption: What Income Qualifies and When Salary Conversion Actually Makes Sense
Under Act XV of 2025 on the Tax Benefit for Mothers Raising Three Children, effective from 1 October 2025, eligible mothers are exempt from paying personal income tax (PIT) regardless of age and without any upper income limit.
Eligibility is linked to entitlement to family allowance, or to having previously qualified for it over a sustained period. This is why the exemption may also apply to mothers who are already retired.
What Income Does the Exemption Cover?
The exemption does not apply to the taxpayer’s entire consolidated tax base. Instead, it is limited to the closed list of income types specified in Section 1(2) of the Act:
- employment income,
- entrepreneurial withdrawal,
- income determined under the flat-rate taxation regime,
- income from agricultural primary producer activities,
- fees received under agency or copyright-related contracts with a payer.
This distinction is often overlooked. For example, rental income from real estate forms part of the consolidated tax base, yet the exemption does not apply to it. The same is true for dividends and capital gains.
What Will the Tax Authority Examine?
According to the NAV Audit Plan for 2026, special attention will be paid to taxpayers engaging in abusive practices in connection with family policy measures.
The plan also separately identifies the review of tax obligations relating to approved dividend payments. This means that the tax authority is monitoring movements between dividends and salary-type income in both directions.
What Most Articles Leave Out: Run the Numbers
Converting dividends into salary is not automatically beneficial.
Even if personal income tax is eliminated, salary remains subject to:
- an 18.5% social security contribution, and
- a 13% social contribution tax (SZOCHO).
Dividends, by contrast, are generally subject to:
- 15% personal income tax, and
- 13% social contribution tax up to the applicable contribution ceiling.
The exemption removes only the personal income tax component. Social security obligations remain.
As a result, for a working-age mother, converting dividends into salary is often more expensive than receiving dividends directly.
However, the outcome depends heavily on individual circumstances. If the annual social contribution ceiling has already been reached, the difference narrows considerably and may even reverse.
More importantly, the tax authority is not concerned primarily with whether the arrangement generates tax savings. What matters is whether the employment relationship is genuine.
A sham employment relationship may be reclassified even when no actual tax advantage has been achieved.
Economic rationality may support a taxpayer’s position, but it can never replace proper documentation of actual work performed.
One Scenario Stands Out: The Retired Mother
A retired employee receiving an old-age pension is not considered an insured person under the Social Security Act.
As a result:
- no 18.5% social security contribution is payable on employment income,
- the employer is exempt from the 13% social contribution tax.
If that retired mother is also eligible for the three-child mothers’ PIT exemption, employment income may effectively leave the company free of payroll-related public charges, while the same amount paid as a dividend would still be subject to 15% personal income tax.
In this scenario, the arrangement can be genuinely advantageous, and this is where the tax benefit is most significant.
The Legislator Has Already Narrowed the Opportunity
New Sections 5(1a) and 5(1b) of the Social Contribution Tax Act, effective from 1 January 2026, introduced a limitation.
For retired individuals claiming the mothers’ tax exemption, a social contribution tax liability arises if the aggregate amount of qualifying income exceeds four times the national annual average salary.
For 2026, this threshold is HUF 34,356,720.
The 13% social contribution tax applies only to the excess above this threshold.
The rules operate through two separate mechanisms.
1. Payer-Based Mechanism
For income from which the payer would normally be required to withhold tax advances, such as:
- salary,
- agency fees,
the liability falls on the payer.
The threshold is calculated separately by payer.
A significant anti-avoidance provision applies: companies that qualify as related parties under the Corporate Tax Act are treated as a single payer. Consequently, splitting income among several related companies does not multiply the threshold.
The tax must be declared and paid by the payer in January of the year following the tax year.
Where multiple related entities are involved, one company may be designated to fulfil the obligation, but all remain jointly liable.
2. Individual-Based Mechanism
For qualifying income that:
- is not received from a payer, or
- is not subject to advance withholding,
such as income earned by:
- sole proprietors,
- agricultural producers,
the obligation falls directly on the individual.
The tax is determined, declared, and paid through the annual personal income tax return based on the total qualifying income received during the year.
Administrative Simplification
Retired mothers benefiting from the exemption are not required to calculate or declare qualifying income if the underlying annual revenues remain below the statutory threshold.
Practical Conclusions
The practical takeaway is twofold.
Below the threshold, the payment arrangement may be fully compliant, with the primary risk remaining the ability to substantiate that genuine work is actually being performed.
As income approaches the threshold, however, payroll administration must carefully monitor annual earnings, including amounts paid by related-party companies on an aggregated basis. Otherwise, social contribution tax liabilities may arise without being detected in time.
It is important that this discussion not be interpreted as a blueprint for tax structuring.
We are not proposing a planning strategy but merely outlining the boundaries of an existing legal framework. The absence of genuine work activity may be challenged by the tax authority even below the threshold, and the tax benefit itself can never serve as the sole justification for establishing an employment relationship.
The Accounting Perspective
Monitoring the threshold is primarily a payroll and compliance task rather than a shareholder issue.
Tracking must take place throughout the year, and any employer-side social contribution tax liability must be settled in the January filing.
If this obligation is missed, the problem will initially arise not for the owner, but in the company’s payroll and tax reporting processes.
3. HEM Transactions: The Risk Begins with VAT, but It Does Not End There
Certified Energy Savings (HEM) constitute a transferable property right registered within Hungary’s Energy Efficiency Obligation Scheme (EEOS).
The NAV Audit Plan for 2026 explicitly mentions the HEM system alongside the Rural Home Renovation Program as an example of government-directed programs that may affect budget revenues. Projects related to residential property renovations, particularly those involving subsidy schemes and energy-saving systems, are identified as expanding areas of tax authority scrutiny.
A typical residential arrangement works as follows: a private individual carries out insulation work or window replacement and transfers the resulting HEM rights to the contractor or trader in exchange for a discount on the works performed.
VAT Treatment of HEM Transactions
From an economic perspective, a HEM transaction is essentially a barter transaction.
Under the VAT Act’s rules governing the tax base (Section 65), both sides of the transaction must be treated separately and each is regarded as consideration for the other.
As a result, the contractor must issue an invoice for the full value of the service provided, rather than the net amount remaining after the HEM-related compensation has been deducted.
The most common mistake is therefore netting the amounts against each other.
The consequence can be significant:
- understatement of the taxable amount,
- underpaid VAT,
- resulting tax exposure during an audit.
Personal Income Tax: Common Assumptions Are Often Wrong
On the private individual’s side, no taxable income generally arises.
Under Point 4.52 of Annex 1 to the Personal Income Tax Act, income received by an end-user private individual from activities generating certified energy savings is exempt from personal income tax.
The exemption covers:
- HEM rights registered in the individual’s favor,
- discounts received on products or services,
- income received in exchange for transferring HEM rights.
Pursuant to Section 108(2) of the Personal Income Tax Act, the exemption applies retroactively to income arising from 1 January 2024 onward.
There is only one important exception:
The exemption does not apply where the income is earned by the individual in the capacity of a sole proprietor or entrepreneur.
The Exemption Is Conditional, and This Is Where the Real Risk Lies
The exemption is intended for the end-user private individual, acting outside a business capacity.
This classification cannot simply be assumed.
Questions may arise where the individual is involved in:
- multiple properties,
- refurbishment projects connected to rental activities,
- repeated renovation transactions,
- intermediary or facilitation activities.
In such circumstances, it may become questionable whether the individual truly acted as an end user.
If that status is challenged successfully, the consequences extend beyond a single aspect of the arrangement.
The entire tax exemption may be denied.
As a result, even the discount received through the transfer of HEM rights could be reclassified as taxable income.
In a tax audit, this is likely to be one of the very first questions raised rather than the final one.
Practical Takeaways
The practical message is twofold.
For ordinary residential projects, private individuals generally have little reason for concern. In most cases, compliance risks primarily arise on the service provider’s side through invoicing and accounting errors.
In atypical situations, however, the position of the individual taxpayer becomes the weaker point.
Questions concerning end-user status should therefore be clarified during contract negotiations and documented properly from the outset, rather than being addressed after an audit has already begun.
Frequently Asked Questions
Is the NAV required to audit my fiduciary asset management structure?
Yes. If the fiduciary asset manager was registered before 12 September 2023, the structure may be reviewed during the first phase of the mandatory audit program. Otherwise, from 1 January 2028, the tax authority may examine the structure within the applicable limitation period.
Will I lose the tax benefits obtained under previous rules?
Not automatically. The transitional provisions applicable to assets contributed under earlier rules remain in force. The key issue is whether the underlying economic substance and purpose of the structure can be properly demonstrated and documented.
Does the tax exemption for mothers raising three children apply to dividends?
No. The exemption applies only to the specific categories of earned income expressly listed in the legislation. Dividend income is not among the eligible income types.
Is social contribution tax payable on the salary of a retired mother raising three children?
As a general rule, no. However, from 1 January 2026, a 13% social contribution tax applies to the portion of qualifying income exceeding four times the annual average national salary. In 2026, this threshold is HUF 34,356,720.
For income subject to tax advance withholding, the liability falls on the payer, calculated at payer level, with related-party companies treated as a single payer. For other qualifying income categories, the liability falls directly on the individual and is determined based on the total qualifying income received during the year.
Does a private individual have to pay tax after transferring HEM rights?
No, provided the income is earned as an end-user private individual and not in the capacity of a sole proprietor or entrepreneur.
What should business owners and advisers do now?
- Prepare a detailed asset inventory for fiduciary asset management structures, including contribution dates, values, subsequent changes, and distribution history.
- Collect trustee resolutions, reports, beneficiary communications, and documentation relating to terminated structures.
- Ensure the remuneration of owners and family members working in family businesses is supported by job descriptions, task records, and a clear compensation rationale.
- Review HEM-related contracts and invoices to confirm that invoices reflect the full value of the underlying service rather than a netted or compensated amount.
The MGI-BPO Perspective
In recent years, many structures have been marketed with tax advantages taking centre stage, while the associated risks were often relegated to the fine print.
The adviser who originally designed a structure is rarely present when the audit engagement letter arrives. The consequences are borne by the client, and the task of gathering supporting documentation usually falls to the accountant responsible for maintaining the books.
At MGI-BPO, we take a different approach.
As tax advisers and accountants, our primary objective is not to maximise tax savings at any cost. Instead, we focus on ensuring that our clients remain protected and compliant years after a transaction has taken place.
That is why we highlight potential risks early, even when doing so makes us the less popular voice at the negotiating table.
Clients who received these warnings from us are not surprised that the NAV is now focusing on these areas.
This does not mean taxpayers should avoid these structures altogether.
Fiduciary asset management arrangements, the tax benefits available to mothers, and the HEM framework are all legitimate legal instruments designed to support specific policy objectives. Taxpayers who have used them lawfully have no reason to fear an audit.
What it does mean is that taxpayers should understand, from the outset, how a transaction or structure will appear when reviewed years later.
The common denominator across all three areas is the same.
The tax authority is generally not interested in whether taxpayers complied with the literal wording of the law. In most cases, they did.
What the authority increasingly examines is the underlying economic substance of a transaction and the documentary evidence supporting it.
In an audit, it is not the story that wins the argument. It is the contemporaneous, dated documentation.
It is worth emphasizing an important practical point: documentation created retrospectively often places a taxpayer in a worse position than having no documentation at all.
Therefore, any evidence that can be created today, at the same time as the relevant decision is made, should be documented today.
References
- National Tax and Customs Administration (NAV) Audit Plan for 2026 (Tax Traffic Light Program):
https://nav.gov.hu/pfile/file?path=%2Fugyfeliranytu%2Fadotraffipax%2F2026-ellenorzesi-terv - Amendments to Sections 65/C, 105, 107 and 114 of the Personal Income Tax Act, introduced through the legislative package implementing Hungary’s Recovery and Resilience Plan (originally submitted as Bill No. T/387).
- Tax Benefit for Mothers Raising Three Children (NAV Guidance):
https://nav.gov.hu/ado/szja/Harom_gyermeket_nevelo_anyak_kedvezmenye - Act XV of 2025 on the Tax Benefit for Mothers Raising Three Children, in particular Section 1(2).
- New Personal Income Tax Return and Social Contribution Tax Rules for Retired Mothers with Multiple Children (NAV Guidance):
https://nav.gov.hu/szja/ujdonsagok-tudnivalok/a-tobbgyermekes-nyugdijas-anyak-uj-szja-bevallasi-es-szochofizetesi-szabalyai - Taxation of Employment Income Earned Alongside a Pension (NAV Guidance):
https://nav.gov.hu/ado/jarulek/A_nyugdij_melletti_munka_jovedelmenek_adozasa - Act LII of 2018 on Social Contribution Tax, Sections 5(1a) and 5(1b).
- Income Derived from Energy Savings Is Exempt from Tax for Private Individuals (NAV Guidance), together with Point 4.52 of Annex 1 and Section 108(2) of the Personal Income Tax Act.
- Auditing Fiduciary Asset Management Structures Begins in September (Adó Online summary based on information provided by Jalsovszky Law Firm):
https://ado.hu/ado/szeptemberben-indul-a-bizalmi-vagyonkezelok-ellenorzese/
