On 19 June 2025, new rules were announced, bringing significant changes to the taxation and accounting regulations for trust foundations. The legislator's goal was to unify previously interpreted regulations and create a clear legal and tax environment.
One key element is the introduction of permanent asset management as a new legal institution for trust foundations, starting from 1 September 2025. This will replace the fiduciary asset management currently practised by these foundations. Permanent asset management can be established for a fixed or indefinite period through a contract or an asset order, even with a unilateral legal declaration. However, it can only result in permanent asset management that aligns with the objectives, frameworks, and conditions outlined in the trust foundation's deed of foundation.
The goal of the amendment is to ensure that assets managed under the legal framework of permanent asset management are treated in the same way as assets managed under fiduciary asset management according to the Civil Code, in terms of tax and accounting. The amendment references the rules of fiduciary asset management as background regulations. As a result, it does not diminish the applicability of the existing favourable tax and duty provisions; instead, it aims to establish a framework for their consistent and predictable application. The amendment was likely necessary because fiduciary asset management activities carried out by trust foundations may have remained "under the radar," as they were not subject to the Act on Fiduciary Asset Management, meaning obligations such as MNB reporting and separate bookkeeping did not apply.
As a result, the law introduces a minor yet significant change in accounting and procedural law: assets managed under permanent asset management – specifically, assets managed by the foundation for this purpose under a separate legal title – will be considered an independent corporate tax subject in the future and will be subject to independent bookkeeping obligations. It is important to emphasise that this new regulation does not affect the management of assets provided by the founder, but rather the newly introduced legal institution – permanent asset management – which replaces the option for fiduciary asset management. With this change, the legislator aims to ensure that assets managed by trust foundations in fiduciary asset management structures are transparently and uniformly integrated into the Hungarian tax system, thereby reducing legal interpretation uncertainties and the financial and legal risks arising from them. For trust foundations that previously managed assets under fiduciary asset management, the relationship will now be considered permanent asset management after the law's entry into force, meaning the new rules will apply.
According to the amendment, the taxation rules for income derived from dividends have also been modified. Under the amendment to the Act on Personal Income Tax, a dividend may include any asset value provided by the trust foundation to the beneficiary, founder, or affiliate, based on a capital change in accordance with accounting rules. However, if the income originates from permanent asset management, it will only be considered a dividend if the source is a separately recorded increase in asset value, and it is received by a beneficiary who is not the founder or affiliate, but another individual beneficiary.
According to the amendment to the Act on Duties, no gift duty will be required for the transfer of assets into fiduciary or permanent asset management, or for the transfer of assets to the trust foundation. Duty liability only arises if the beneficiary actually acquires an asset, such as a movable item or real estate, from the managed property or the foundation. In such cases, the acquisition is treated as if it directly came from the property disposer or the founder. The return of the property by the disposer or founder is not subject to gift duty.
In summary, the new laws introduce several targeted and meaningful clarifications and additions to the taxation regulations concerning fiduciary asset management and trust foundation structures. While the new provisions clarify previously debated issues, it is likely that further legal interpretation questions and potential court disputes will arise during practical application, particularly regarding retroactive applicability.
By Krisztian Kiralyvolgyi, Partner, KCG Partners
