On 23 July 2019, Hungary published a legislation through an official gazette that provides for the implementation of exit tax and hybrid mismatch rules of the EU Anti-Tax Avoidance Directive (ATAD). On 12 July 2019, the Hungarian legislator passed this rule.
The provisions on hybrid mismatch will apply from 1 January 2020, allowing Hungary to tackle double deduction or deduction without taking into account that result from the differences in the legal characterization of payments, financial instruments and entities, or in the allocation of payments according to the laws of two or more jurisdictions.
The exit tax rules will apply from 1 January 2020 and Hungary will be able to tax the economic value of capital gains yet unrealized at the time of exit created in its territory. The exit tax will be charged on the market value of the transferred assets and activities established in accordance with the rules on transfer pricing as at the time of their exit less their value established for tax purposes.
