Airbnb has became more and more popular in Hungary. Many people, especially in the downtown of Budapest, offer their home for short-term rental. OK, OK, that is fine but what if you want to do it in the “clean” way? What licenses do you need? What is the best taxation system? What are the advantages and disadvantages?
So here You are, dear Reader, thinking about starting Airbnb in Hungary. Why? Because everybody does it and you heard you can make some more money compared to long-time rental.
But how can you that in the right and legal way? This article is a comprehensive, although, understandable material about this topic.
Airbnb from a legal perspective
There will be major changes in short-term rental activity regulations from 2020. Please read or latest article about this issue.
According to Hungarian legislation, Airbnb is considered a short-term rental, which is classified as tourist and/or hotel activity. So now have entered to the same market as Hilton? Legally: yes.
Since it generates regular incomes and the purpose is to gain profit, the operator should register a Hungarian business. Either a company or a private enterprise.
In addition, the local government’s permission is also required to carry out Airbnb in the clean and legal way.
Airbnb and licenses you will need
In order to do Airbnb legally, you will need the following linceses.
- Some kind of registered Hungarian business: company or private enterprise
- License from the local government’s architecture and landscape department
- License from the local government’s taxation department for tourist tax
Obtaining the license from the local government
Step 1: Checking existing licenses, terminate if necessary
Check if there is any ongoing license issued to your flat. Please note, that if the flat has already has a previous license issued by the local government that has not been terminated by the former operator, obtaining your license could be quite tricky. Why?
First of all, you will have to terminate the ongoing license. If the former operator is missing or does not want to terminate the license, you – as the owner – has to withdraw it. To do this, you will need a declaration about the termination of the license signed by the owner/legal user and two witnesses.
The local government, than, will send out an official letter for the former operator. If there is no reply in 15 days, the local government will issue an edict about the temporary termination of the license. It will be legally applicable after additional 15 days.
What does it mean? It means that the termination of the former license may take as much time as 2 moths! That is why this step is crucial.
However, you may meet this problem only, if somebody else is the legal owner of the flat you would like to operate under Airbnb.
Step 2: Obtaining landscape license
To have a landscape license, you will need to fill out the local government’s form. They will than reclassify your flat from normal to tourist activity.
Reclassification sounds and easy and smooth procedure, however, it is not.
The problem is with parking. If there is not enough parking spots, that could mean a serious problem.
Every flat needs at least one parking spots. That is true for newly build houses and for those that are reclassified. If you do tourist activity, each of your room involved in Airbnb must have one parking spot. But there are some benefits and special calculations. Sounds complicated? It is…
Here is an example. Let us assume you plan to operate a 5-room flat, and you are living in one of the rooms, 4 spots are needed. Since every flat is considered to have 1 spot, you will only need 3. There are also some benefits, depending on local government, so let us assume you will need 2. If you cannot present 2 parking spots, you will have two options:
- Pay 1.000.000.-HUF for the local government and “buy” the parking spot forever
- Have a very-very long term (20 years) lease agreement with a garage owner who can provide you an exclusive parking spot which must be marked with a sign that it belongs to only you.
Step 3: Obtaining operational license
Once you struggled through landscape license and your flat is reclassified, you will have to obtain an operational license.
To do this, you will need:
- Lease agreement of the flat – if it is not yours – with land registry number indicated in it
- The edict from the landscape department
- A schema of the flat with all the rooms and beds marked, and the number of guests indicated
- The stamped and signed operational and organizational regulation of the block of flats
- A filled out form
- 3.000.-HUF duty stamp
- Specimen of signature
- Certificate of the registration of your business
Step 4: Registering under local tourist tax
This is the final step and then you are free and legal to do Airbnb!
What you will need:
- Operational license
- Filled out form
- Guestbooks to be stamped (we recommend to buy around 10, just to be on the safe side)
Airbnb and taxation
You will face two major taxes during Airbnb:
- Central tax
- Local tax
Central taxes of Airbnb
Central taxes include:
- Income tax
- Dividend tax
Income and dividend tax depends on the legal format of your enterprise. Corporations pay 9% corporate income tax on their profit. Dividend payed out is taxed by 15% personal income tax and 14% health contribution (EHO).
Private individuals pay either 15% personal income tax or a fixed amount of 38.400.-HUF/room/year. However, in the latter case, there are restrictions also. The most important are:
- The private person supposed to be the owner/or registered tenant of the flat
- The maximum number of flats to be taxed this way is 3
- The room could be rented to the same person up to 90 days each year
VAT is 18% but you may fall under the VAT free system up to 8 million HUF of proportional yearly income upon your choice.
The taxation in Hungary is very complicated and this article is too short to explain everything in details. However, we wrote a very useful free eBook about doing business in Hungary and taxation which may be downloaded.
The two local taxes that you will have to pay are:
- Tourist tax
- Property tax
Tourist tax is either a fixed fee based on the number of persons and nights spent in your Airbnb “hotel” or a certain percentage that taxes the actual income. The method introduced depends on the local government. If you do Aribnb, local tourist tax report must be filed every month based on the records of your guestbooks.
Property tax is a fixed fee calculated by the local government based on the classification and area of your flat. It must be paid by the owners/registered tenants. If you do not own the flat, this tax does not affect you.
How we may help you?
We can save you a lot of effort, struggle, failure, time and money. How? Either you may authorize us to act in your name and obtain the license or we accompany you during the procedure or we help with useful online consultancy.
In the end, you will have a 100% Airbnb license registered under your name in Hungary.
We have quite an experience, besides, our fees are moderate and tolerable.
If you would like to obtain a price offer, you may fill out our quick
If you have further questions or would like to request and inquiry, please feel free to contact us.
Tel: +36 20 548 4103