Truthful wealth disclosure and the prohibition on double counting – based on the draft

Comprehensive coverage would not mean taxation without exceptions

Under Section 1(1), determining liability would generally begin with all the taxpayer’s assets. This would not override the draft’s own exceptions. Comprehensive coverage would therefore not mean that every possession or entitlement would enter the tax base in every circumstance. The scope of taxation and the specific provisions would first need to be interpreted; all wealth relevant under those provisions would then need to be disclosed.

Under Section 2, point 39, assets would include more than registered objects: rights, claims and other economic interests expressible in money could also qualify. Their designation, non-transferability or unrealised status would not independently exclude them. Whether an exception applied, including those in Section 6(3)–(5), would remain a separate question.

Truthful disclosure would extend to the circumstances supporting valuation

Section 1(2) would require complete and truthful disclosure of the information, facts and circumstances necessary to determine liability. Listing possessions would therefore not suffice. Information needed for a valuation method, rights attached to a holding, and the actual existence of a proposed debt deduction could all form part of the factual material from which the tax base would be established.

Section 25(7)–(8) would connect this principle to itemised return requirements and document retention. The return would identify the valuation method, essential underlying information, the relevant ownership share and the legal basis of debts. Supporting records would have to be retained until the limitation period for assessment expired. The draft would thus link the content of disclosure with its subsequent verifiability.

Single counting would operate in both directions

The first rule in Section 1(3) would address situations where several provisions would otherwise require the same taxpayer to include the same asset or value repeatedly. It would be included only once. Because the rule would cover identical value as well as identical assets, it would prevent more than repeated listing under the same name. Different legal grounds would not independently justify multiple inclusion.

The same subsection would limit reductions. Where the same factual basis supported several grounds for reducing the tax base, only one could be used. The principle would therefore not operate simply as a concession: it would prevent both repeated taxation and repeated deduction. It would not, however, declare that every economically connected but independent entitlement should be treated as the same asset.

Shared wealth would be allocated before individual bases were determined

Section 7(1) would attribute jointly owned assets according to ownership shares and apply that approach correspondingly to shared rights. This would not mean including the entire asset in several taxpayers’ wealth. For matrimonial common property, Section 7(2)–(3) would provide separate contractual, elective and equal-allocation rules determining the amount attributed to each spouse.

Section 7(6)–(7) would follow a different approach for a tax-transparent association. Its wealth would appear at member or participant level, in proportions determined by the governing law or equally if those proportions could not be established. Corresponding portions of its debts would also be attributed to them, but only if the other deductibility conditions were satisfied. Allocation would not itself create an additional deduction.

Aggregate business valuation would use specifically adapted inputs

For sole traders using entrepreneurial-income taxation, Section 13(1)–(2) would apply Section 12(3) and Annex 1 with adaptations. Net business wealth would replace equity, while after-tax entrepreneurial income determined under the Personal Income Tax Act would replace after-tax profit. The draft would refer to that external statute; further rules not reproduced in the supplied text could not be derived from this reference.

Net business wealth would comprise the documented value of assets used for or connected with the activity, less actual, properly substantiated business debts. Above HUF 500 million, an increase for hidden reserves would also arise. That valuation threshold would differ from the HUF 1 billion net-wealth threshold in Section 6. Annex 1, points I and IV, would detail the valuation components.

Items already reflected in business value could not reappear

Section 13(3) would expressly prevent assets or debts already included in aggregate business valuation from being counted again under another heading when determining the tax base. This would implement the general principle in Section 1(3). Both sides would be affected: an asset valued within business wealth would not increase the base again, and an already deducted debt would not produce another reduction.

Section 13(4) would prescribe a different system for sole traders not using entrepreneurial-income taxation and for agricultural primary producers. Each asset would be valued under its applicable provisions. No separate capitalised earnings value would be established from income generated by the activity. Consequently, aggregate and item-by-item valuation would not be freely interchangeable or capable of supporting parallel inclusion of the same wealth.

Substantiated economic reasons would qualify the anti-avoidance principle

Under Section 1(4)–(5), valuations, transactions or other conduct aimed at circumventing valuation or tax-base rules would breach proper exercise of rights. The authority would examine the period beginning when introduction of the wealth tax became public knowledge. The text would not specify a calendar date for that event, so the draft alone would not establish an exact starting date.

Section 1(6), however, would regard a transaction as proper if the taxpayer demonstrated genuine economic reasons or acceptable circumstances independent of tax liability. Section 27(2)–(3) would likewise attach significance to complete, truthful disclosure in real-estate valuation: subject to further conditions, penalties and late-payment surcharges could be excluded, but the tax difference could still be assessed. Truthful disclosure would therefore not guarantee acceptance of value or exemption.

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