Usufruct, monetary claims and option rights – based on the draft

Outstanding principal would govern qualifying monetary claims

Section 21(6) would specifically address monetary claims arising from loans, credit relationships or deferred payment. The claim would have to be unconditional and quantified. Its calculated value would be the principal outstanding on the final day of the tax year. This method would therefore not cover every promise of future receipts, nor directly use the creditor’s entire expected future cash flow.

Section 21(6) would exclude the portion classified as irrecoverable under the Accounting Act. The draft would refer to that external classification without supplying its detailed conditions; mere uncertainty about payment would not therefore establish an automatic reduction. Other or conditional claims would first require classification, with section 10’s year-end market-value rule filling any gap where no specific provision applied.

Usufruct and other property rights

Alongside usufruct, section 22(1) would identify land-use and other use rights, holiday-use and timeshare rights, asset-management rights and vehicle operator rights. It would also cover economically corresponding foreign-law rights and building rights. Classification would consequently extend beyond Hungarian terminology: substantive correspondence would matter. This would determine the valuation category, not independently establish the complete scope of tax liability.

Except for building rights, section 22(2) would refer to section 72 of the Duties Act, substituting the draft’s calculated asset value for market value. Multipliers and detailed rules absent from the supplied material could not be reproduced from that reference. Building rights would be a separate exception: section 22(3) would use their year-end market value rather than the incorporated method governing the other listed rights.

Coordinating multiple burdens with the owner’s value

Where several section 22 rights burdened one asset, subsection (4) would initially value each separately. Their combined calculated value could not exceed the asset’s calculated value disregarding those rights. Any excess would require proportionate reductions preserving their relative values. The cap would therefore coordinate separately determined amounts rather than arbitrarily favour one right-holder.

Section 22(5) would permit the owner to deduct the rights’ combined value only where the asset had been valued without accounting for them. Listed situations would include rights created after the relevant transaction or valuation date and assets valued using section 17. If a burden already affected the valuation, another general deduction would not follow. Section 1(3)’s prohibition on duplicate reductions would reinforce that connection between the values.

Option classification and the mandatory valuation sequence

Section 23(1) would treat independently valuable purchase, sale, subscription, conversion and similar rights as options. Through a unilateral declaration on predetermined or determinable terms, the holder could acquire or dispose of an asset, or demand value-linked cash settlement. Neither the right’s name nor its governing law would determine classification. Economic and contractual substance, rather than merely the word “option”, would govern.

Section 23(2) would impose a sequence: a regularly traded organised-market option would use its final trading-day closing or settlement price, followed, if unavailable, by institutional positive market value. Next would come consideration paid between independent parties for creation or transfer within twelve months, without a subsequent material value-affecting change. Only thereafter would an appropriately qualified independent expert use a generally accepted valuation method. These would not be freely interchangeable alternatives.

Intrinsic value and narrow exclusions

Under section 23(3)–(5), calculated option value would be the higher of market and intrinsic value. An acquisition right would use the positive excess of underlying calculated value over total exercise consideration; a sale right would reverse that comparison. Cash-settled rights would use the positive contractual year-end settlement amount. Total consideration would include non-cash performance, but exclude the price previously paid to acquire the option.

Section 23(6) would identify duration, exercise conditions, volatility, yield, interest rates and transfer restrictions as expert valuation factors. Subsection (7) would exclude rights dependent on future personal services or performance only if neither exercisable nor transferable before fulfilment. A future exercise window alone would not suffice. Separate inclusion would also cease where the right was not independently transferable and its value was already fully reflected in another asset’s calculated value.

The option obligor’s deduction would remain conditional

Section 23(8) would permit the option obligor a debt deduction departing from section 6(1). It would use the absolute amount of institutionally recorded negative year-end market value, or otherwise the option’s calculated value under the preceding rules. Both routes would require year-end legal enforceability and an inability for the obligor to revoke the option unilaterally. A merely revocable promise would therefore not qualify.

For the non-institutional route, section 23(9) would require the return to identify the holder and tax identifier, underlying asset, option type, exercise consideration, exercise-period end and deducted amount. Subsection (10) would prohibit both another debt deduction for the same amount and a corresponding reduction in the underlying asset’s value. Recognition of the obligation would consequently open one documented deduction route, not several parallel value reductions.

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