Hungary Offers Alternative Structures To Trusts Beset By Greater Transparency (wealthbriefing.com 2023)

In today’s dynamic landscape, asset protection and privacy are paramount. In his recent article published on   wealthbriefing.com,  Dr. Menyhei sheds light on the challenges traditional trusts face in safeguarding sensitive information amid evolving privacy legislation and introduces alternative legal structures offering a solution.

We are pleased to announce that the third edition of “A Bizalmi vagyonkezelés” (Fiduciary asset management) has been published by the ORAC publishing house. This expanded and updated volume is authored by a team that includes two of our managing partners Gábor B. Szabó and Ákos Menyhei and their esteemed colleagues István Illés, Borbála Kolozs and István Sándor.

The new edition encompasses the legislative changes related to trust management that have occurred since the second edition in 2018. Notably, a separate chapter has been dedicated to asset management foundations, which were introduced into the Hungarian legal system in 2019. These foundations represent a distinct form of the asset management profession, governed by new and specific rules, and present promising untapped opportunities.

The European Union offers a very strong and stable environment for international asset protection purposes, in which solutions available in Hungary provide exceptional protection and privacy for assets; namely trusts, asset management foundations and so-called hybrid trusts.

How should new legal forms—trusts, asset management foundations and hybrid trusts—be treated and their taxation implemented into an existing tax regime? In this article published by Oxford University Press, Dr Menyhei explains the key issues and significant benefits of the taxation of trusts, AMFs and hybrid trusts, providing answers to these questions.

This article discusses the working mechanism of the Beneficial Ownership Register (BOR) in Hungary with a special focus on the asset management foundation (AMF), the trust and the hybrid trust. It also analyzes the impact of BOR and AML law on the privacy of the participants in an AMF, trust, or hybrid trust.

The tax treatment of the trust, the private foundation and the AMF is based on tax neutrality in Hungary, providing at least an equal and not burdensome treatment of these vehicles compared to any other alternative legal solutions.