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Luxembourg is deleted from the map of Hungary

The recent amendment of the Luxembourg – Hungary double tax treaty will result in a sharp decrease of Luxembourg-based schemes for Hungarian real estate transactions. Those groups which currently use such schemes for holding their Hungarian real estates will need to react fast.

Foreign investment groups often structure acquisitions of Hungarian real estate through Luxembourg-based holding companies. In such schemes each Hungarian real property is owned by a separate Hungarian company which is, in turn, held by the ultimate shareholder through a foreign holding company, often established in Luxembourg. From a tax point of view, this scheme provides an optimal solution not only for the continuous income flow from the real estates, but also for an eventual sale of the real estate.

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