Under the Hungary Guest Investor program rules, the main requirement real estate funds must meet is to be registered by the Central Bank of Hungary (Magyar Nemzeti Bank).
Types of assets. Real estate funds may comprise a range of assets. Asset types are strictly regulated by the law and include the following:
- Hungarian or foreign real estate;
- shares in real estate companies;
- property rights related to real estate;
- financial instruments, such as securities, foreign currency, and deposits;
- movable properties necessary for the use, operation, or maintenance of a property or facilitating thereof.
Composition of funds. Hungarian legislation also regulates the composition of funds. To qualify for a Golden Visa program, a fund must fulfil the conditions as follows:
- at least 40% of the fund’s net asset value is invested in residential real estate located in Hungary;
- 15% of the fund’s assets constitute liquid assets, meaning they are quickly accessible — in bank accounts, time deposits, government securities;
- at least 5% of liquid assets are in Hungarian government bonds;
- in the case of bond investments, 95% are in government bonds;
- other assets do not exceed 52% of the total assets.
Management. Funds are controlled by a licensed fund manager. To be admitted to the Hungary Golden Visa program, a fund manager must have a premise security certificate or be on the list of the Office for the Protection of the Constitution.
A fund manager also appoints an independent custodian who provides escrow account services, safeguards and manages the fund’s bank or securities accounts, and supervises the fund manager. The custodian also performs technical tasks related to the sale and purchase of investment units and the payment of yields.
Investors’ rights and obligations. When a Hungary Golden Visa applicant makes an investment, they get an investment certificate in a printed or digital form. The certificate secures a claim against the investment fund and other rights of the investor. To be valid, the document must contain such information as the fund’s name and type, nominal value and serial number of the unit, the owner’s name and rights, and the issue date.
While holding fund units, investors can profit from receiving yields. Another way of getting income is to sell fund units at a higher price over time. Any income earned by the investor is taxed at a 15% rate.
Hungary Golden Visa applicants investing in real estate fund units must hold their certificates for at least 5 years to maintain their residency. To qualify for an extension of a residence permit after 10 years, the applicant must once again purchase real estate fund units for at least €250,000.