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NGARY Dr Katalln Szamosi & Dr Eniko Karsay | S B G K Patent and Law Offices

CULTURAL HERITAGE A N D ART MARKET

1. Does your country have regulations on national patrimony, cultural heritage, indigenous art and like, and if so, what are the essentials?

In Hungary, both cultural heritage and indigenous art are legally protected.

The new Fundamental Law of Hungary (in effect from 1 January 2012) contains references to culture in its preamble

and in Article R Article X, and Article XI.

The notion of 'cultural goods' is defined by Act LXIV of 2001 on the Protection of the Cultural Heritage as follows:

'outstanding and typical objects, images, sound recordings and written memories and other proof of the origin and

development of lifeless and live nature, mankind, the Hungarian nation and the histon/ of Hungary, as well as pieces of art'.

Archaeological finds are protected by legal acts (they should be state property) and their placement into public

collections is obligatory. Monuments with their movable accessories (furnishings, equipment) without respect to who

owns them and objects in public collections are also protected. The Cyula Foster National Centre for Cultural Heritage

Management declares protection of cultural goods (those not falling under the scope of the above categories) which

are irreplaceable and of outstanding significance, registers them and the owner of cultural assets for which protection

has been declared, and is obliged to make arrangements for their safeguard and scientific research. Permanent export

of protected cultural goods, or those for which protection has been declared, is prohibited: in such cases, a temporary

export licence shall be required and with conditions to return.

Hungary has been a member of UNESCO since 1948. Hungary ratified the 2003 UNESCO Convention safeguarding

intangible cultural heritage in 2005. The Hungarian National Committee for Intangible Cultural Heritage and the

Hungarian National Inventor/ of Intangible Cultural Heritage was established in 2008. Since April 2009, the body

responsible for the implementation of the Convention is the Intangible Cultural Heritage Department of the Hungarian

Open Air Museum in Szentendre. The folk art of the Matyo, embroidery of a traditional community and falconry, a living

human heritage is on the Representative List of the Intangible Cultural Heritage of Humanity from December 2012.

2. Is your country party to the 1970 UNESCO Convention? What are the stril<ing/ distinguishing features of your national implementation legislation?

Hungary is party to the 1970 UNESCO Convention (Decree 2. of 1979). « ' ~ -

Hungary notified the following declarations at the deposit of the instrument of ratification: ' .

Articles 12., 22. and 23. of the Convention contradict the United Nations General Assembly Resolution 1514 (XV.) of 14

December, 1960. Article 20 of the Convention is not consistent with the principle of the sovereign equality of states,

the convention considering that regulated matters should be open to all states.

3. Is your country a party to the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects and/or any other international conventions or bilateral treaties relating to cultural property and their trade?

Hungary is party to the 1995 UNIDROIT Convention which entered into force on 1 November 1998 in Hungary. The

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Convention was published in the Act XXVIII of 2001 including the declaration of Hungary that the claims for the

restitution of cultural objects do not lapse in accordance with Hungarian Laws. Furthermore, Hungary declared

that claims for the restitution or request for the return of cultural objects brought by a state under Article 8 shall be

submitted to Hungary through diplomatic or consular channels Article 16 (c) of the Convention.

Furthermore, Hungary is party to the 1954 Hague Convention for the Protection of Cultural Property in the Event of

Armed Conflict (Decree 14. of 1957) and to the Second Protocol to the 1954 Hague Convention (Act XXIX. of 2006).

4. Is the art and cultural property market thriving in your country? Please provide data about trade volumes, dealer presence, etc, where available.

The art trade, previously under strict state monopoly, was directed to the private sector more than 20 years ago.

Nowadays, a European-level art trade is coming into existence in Hungary; art market participants have been finding

their positions, the special fields of the different galleries and auction houses have become settled, the supply and

demand specified by the market and legal regulations safeguard the appropriate operation of the art market. Seventy

per cent of national art traffic is a result of the sale of paintings and graphic works, followed by 10 per cent market

share from the sale of jewellery and especially silver items often bought as investments. Over the past few years, the

most successful auctions have involved paintings. Supply has been strengthened by the increasingly active research

work of the galleries, as a result of the rediscovery of many lost works of art.

There are no official statistics on the volume of the total Hungarian art market, although its value is estimated at

around EUR 49-65 million. In the winter season of 2012, the painting titled 'View of Trau in the Sunset', created by

the Hungarian artist, Tivadar Csontvary Kosztka in 1899, which was offered for auction by a private collector, set a new

Hungarian auction record with its hammer price of approximately EUR 843,000.

The Hungarian art and cultural property market is witnessing a revival after the financial crisis of 2007-2008 and

the prestige of Hungarian painting is unquestionably on the rise again. The first Hungarian Painting and Work of

Art Expert's Office was established with the purpose of protecting Hungarian painting abroad against increasingly

emerging forgeries and to help buyers receive answers to their questions regarding the authenticity, artistic quality and

commercial value of artwork.

A unique feature of the Hungarian art market in Central and Eastern Europe is the great number of auction houses.

The most important Hungarian auction houses continuously operate in a regulated manner and are members of the

National Federation of Art dealers and Galleries.

PURCHASE A N D EXPORT

5. What is the due diligence required from a buyer?

There is no specific mandatory legal regulation pursuant to Hungarian law.

If the buyer purchases a painting from a flea market (eg, Ecseri flea market in Budapest) or over the internet, then the

buyer shall calculate the risk of purchasing a fake product, counterfeit or stolen work of art.

It is recommended to check the publically accessible online database on stolen and missing works of art available on

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the website of the Gyula Forster National Centre before any purchase. The cJatabase consists of the recorded data and

photographs of some 3,500 works of art that have been stolen or have gone missing in the last 50 years.

The auction buyer shall inspect the condition of the auction item and make sure that it corresponds with those included in the catalogue. It is important to check the auction terms and conditions before purchase, because the auction houses usually exclude liability for defective items and any warranty claims against the auction houses following the auction.

Good faith has key importance before a Hungarian court. The court examines all the circumstances of the acquisition,

including the character of the parties, the phce paid, whether the buyer checked any reasonable accessible register of

stolen cultural goods and any other relevant documentation which the buyer could reasonably have obtained or took

any other necessary steps that a reasonable person would have taken in the circumstances.

6. Are there any particular features of local law that require a buyer's attention, whether in private treaty purchase or purchase at auction?

The cultural assets kept in museums, different public archives, and histohc documents in librahes are protected. The

ownership of the protected cultural assets can only be transferred on the basis of a written contract. The Hungarian

state has a pre-emption right in case of paid transfer of ownership title of the protected cultural assets.

When such protected cultural assets are transferred - especially at auction - the trader and also the owner shall

immediately report all changes related to them (eg, the name and address of the owner, the treasure place of the

object) to the authority, but not later than eight days from learning of the change.

The buyer must contact the auction house at the latest within three years from the date of the auction if the buyer has

any substantiated doubt with respect of the purchased work of art.

7. What are the remedies in case of a fal<e, forgery or counterfeit?

The Hungarian Criminal Code contains no special crime on the counteri'eiting or forging of artworks.

The buyer of a forgery can submit an accusation to the competent police authorities on the basis of fraud. During

the criminal procedure, the buyer as victim can submit his damages claim. Furthermore, the buyer may demand

compensation for damages in accordance with the rules of civil law by filing a civil action before the competent court.

8. Is there any VAT or sales tax and, if so, (distinguishing between goods imported and exported by a local or foreign buyer) what are they?

The standard VAT rate in year 2013 is 27 per cent of the taxable amount.

In case of acquisition of works of art, collectors' items or antiques within the European Union, VAT shall not be paid:

where the vendor is a taxable dealer and able to prove that VAT has been applied to the goods in the member

state in which their dispatch or transport began according to the national law of that member state which is

considered equivalent to Articles 312-325 of the Council Directive 2006/112/EC (VAT Directive).

where the vendor is an organiser of a sale by public auction and if able to prove that VAT has been applied to

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the goods in the member state in which their dispatch or transport began according to the national law of that

member state which is considered equivalent to Articles 333-341 of VAT Directive.

The Hungarian Act on VAT contains special definitions for works of art, collectors' items and antiques and a chapter on

the particular provisions relating to these goods and to the dealer of these goods/organiser of a sale by public auction.

The local person can request tax exemption up to HUF 6 million.

9. Is there an artist's resale right (droit de suite) and, if so, how does it apply?

Royalties shall be paid if the ownership of an original work of art is transferred for a consideration with the involvement

of an art dealer and this royalty shall be paid only after the first transfer of ownership of the work of art by the author

The right to this kind of remuneration may not be waived.

For the purposes of the provisions on the resale right in the Hungarian Copyright Act, 'original work of art' means works

of graphic art (eg, paintings, drawings, engravings, prints, lithographs, sculptures), works of plastic art (eg, tapestries,

ceramics, glassware) and photographic works, provided they are made by the author himself or are copies considered

to be original works of art. Copies of works of art shall be considered to be original works if they have been made in

limited number by the author himself or under his direction. Copies of works of art which are numbered, signed or

otherwise appropriately marked by the author shall be considered to be such copies. In this context, 'art dealer' means

any natural or legal person or business company having no legal personality distributing works of art.

The royalty shall be determined at the different rates based upon the value of the works of art, or may be expressed

in monetary terms (hereinafter referred as 'sale price'), exclusive of taxes and other public dues (eg, 3 per cent for the

portion of the sale price from EUR 50,000.01 to EUR 200,000, expressed in HUF; 1 per cent for the portion of the sale

price from EUR 200,000.01 to EUR 350,000, expressed in HUF). The total amount of the royalty may not exceed the

amount in HUF which is equivalent to EUR 12,500. The royalty shall be paid by the art dealer to the collecting society

performing the management of rights in graphic and plastic works of art.

Where a museum institution (eg, museum, public museum collection, exhibition sites) obtains the ownership of an

original work of art from a person other than an art dealer, there shall be no obligation to pay the royalty provided that

the operating of the museum is not intended to generate or increase income even in an indirect way.

The provisions on the resale right shall apply to: (1) any author or his/her legal successor who is a national of any of

the member state of the European Economic Area, as well as; (ii) nationals of any state outside the EEA, provided that

the laws of the country of citizenship of the author or his/her legal successor ensures resale rights to authors and their

legal successors from the member states of EEA, or (iii) author or his legal successor who is not a national of any of the

member states of the EEA, but who has his habitual residence in Hungar/.

The Directive 2001/84 /EC of the European Parliament and of the Council of 27 September 2001 on the resale right for

the benefit of the author of an original work of art is harmonised in Hungary.

10. Are there any export restrictions in respect of certain cultural property or otherwise and, if

so, what is the procedure?

Cultural goods exceeding 50 years of age or declared protected or registered by a public museum or archive may be

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exported only with a licence issued by the Cyula Foster National Centre.

Protected cultural goods can be exported only with this licence and only for a determined pehod, the maximum of

which must be stated in the state guarantee, insurance contract or other adequate covenants.

The licence for the export of these cultural goods can be issued for an indefinite period or for a determined period from

one year up to 10 years.

Cultural goods, which are not protected or are less than 50 years old, can be exported without any permit. Nevertheless,

the authority issues a certificate on the legality of the export of the non-protected cultural goods in case a request is

filed for it.

Protected cultural objects and the objects of public collections can have a temporary export permit in substantiated

cases (exhibition, research, restoration, etc) from the authority.

Pursuant to section 215/B of Hungarian Criminal Code on illegal use of cultural goods, any person who, without a

licence, exports cultural goods, or who exceeds the limits of an export licence, shall be punishable by imprisonment for

up to three years. Furthermore, a cultural heritage fine should be paid (approximately EUR 30 up to 830,000).

11. Are there any 'free ports' and, if so, what is their regime?

No, there are no'free ports'in Hungary.

PEACEFUL ENJOYMENT

12. What are the rules on import customs and VAT clearance?

The importation of goods is subject to VAT Importation of goods shall mean the entry into the Community of goods

which are not in free circulation within the meaning of Article 24 of the Treaty establishing the European Community.

Hungary ratified the Convention on centralised customs clearance.

Import duty and taxes are due when importing goods into Hungary from outside of the EU whether by a private

individual or a commercial entity. The import duty and taxes payable are calculated on the value of the imported

goods plus the cost of importing them (shipping and insurance).

For every person or company starting the clearance process, a registration number (VPID number) must be registered

with the Hungarian Customs Authority.

13. What is the buyer's protection against title claims, in general? Is good faith relevant and, if so, what are the requirements?

According to the Hungarian Civil Code, a bona fide buyer shall acquire ownership of a thing that has been sold

commercially, even if the dealer was not the owner of the thing. It means that the buyer shall not examine the

ownership title of the dealer as seller Taking into consideration the circumstances of the sale and the price of the

purchased thing, the good faith of the buyer can be questioned. The buyer did not acquire the ownership of the thing if

he knew, or ought reasonably to have known, that the dealer is not the owner of the thing.

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A person who has, outside of commercial circulation, acquired a thing in good faith and for consideration from a person

to whom the thing was entrusted by its owner, shall obtain ownership (eg, the way a second-hand shop selling items

on a commission basis acquires a thing from a private person). However, the owner may reacquire the thing within one

year of the initial acquisition by refunding the consideration. Otherwise the rules of bona fide possession without legal

grounds shall apply to the parties' legal relationship according to which a possessor may refuse to surrender a thing

until his demands claimed in connection with possession are satisfied; the provisions on responsible custody shall

apply to his legal status. A bona fide possessor shall not be liable (eg, for damages) for the duration until possession

is reclaimed from him (eg, in court). The buyer shall mal<e the necessary steps for the clarification of the ownership by

this kind of purchase, which shall be proved in court, otherwise the buyer cannot be considered to be bona fide.

14. What is the buyer's protection against Holocaust-based claims?

There are no special rules for Holocaust-based claims.

15. What is the buyer's protection against restitution claims for violation of foreign export restrictions ('looted property')? Please explain conditions (and recent practice, where appropriate) on which your country grants assistance to foreign countries seelcing restitution of cultural objects.

Any states in the EEA may initiate proceedings against the possessor or the holder with the aim of securing the return

of a cultural object which has been unlawfully removed from its territory before the competent Hungarian court

(Metropolitan Tribune). The return proceedings may not be brought more than one year after the requesting state

became aware of the location of the cultural object and of the identity of its holder; or more than 30 years after the

object was unlawfully removed from the territory of the requesting state; or 75 years where the object forms part of

public collection or are ecclesiastical goods. The description of the cultural object and the declarations on the unlawful

removal and on the classification as a cultural object of the central authority of the requesting states shall be attached

to the petition beyond other mandatory documents usually prescribed. The Foster Cyula National Centre is appointed

to co-operate and promote consultation between the states' competent national authorities.

16. What are the policies, regulations and practices of your country seelcing the repatriation of illegally exported cultural property?

The repatriation of illegally exported cultural property is important in the frame of protection of cultural heritage. For

this reason Hungary ratified the 1970 UNESCO Convention and the 1995 UNIDROIT Convention which complement

each other

Under the Act LXXX of 2001 and the Council Directive 9 3 / 7 / E EC of 15 March 1993 on the return of cultural objects

unlawfully removed from the territory of a member state, the possessor has to return the cultural object to the

applicant state if it was illegally exported.

The Cyula Foster National Centre is the appointed authority for restitution cases on the basis of the ratified international

conventions. This Centre supplies the official and magisterial tasks related to the cultural goods from 21 September,

2013 and operates a registry of stolen or lost art objects. The predecessor of the Centre concluded a co-operation

agreement with the police and the customs authority on 22 March 2005 for efficient protection of cultural goods.

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17. Is there a regime of anti-seizure guarantee ensuring the safe return of objects on loan to local institutions?

Due to ttie significant insurance costs connected to the 'Cezanne and The Past: Tradition and Creation' exhibition

organised by the Museum of Fine Arts (October 2012 - February 2013), Act XCV of 2012 on the Special Protection

of Borrowed Cultural Goods was passed urgently, which stipulates an anti-seizure guarantee for borrowings of such

scale. Under the period of the special protection of the borrowed cultural goods, it is forbidden to execute any measure

or denunciative action ordered in the course of a court, administrative or other official procedure which limits or

terminates the possessory title or the right of disposal regarding the borrowed cultural goods. This special protection

does not prevent the execution of any measure of denunciative action ordered with the aim of regaining the cultural

goods which were illegally expropriated from the exhibitor The exhibitor shall file an application form with a request for

this special protection to the Cyula Forster National Centre for Cultural Heritage Management. The period of special

protection is determined on the basis of the loan agreement, but the temporary exhibition can be open for a maximum

of 12 months. The special protection can be prolonged for a further four months only in special cases (eg, restoration).

18. Are there artist rights (author's rights, copyrights) affecting the use of artworks by their owner (eg, public exhibition, reproduction in museum and auction catalogues as well as other forms of reproduction)?

It is regulated in the Hungarian Copyright Act that the owner of fine art, photographic or applied artwork is obliged to

make the work temporarily available to the artist so that he can exercise his author's rights, if in so doing the author

does not infringe the owner's equitable interest.

The author's approval is required for the exhibition of fine art, photographic and applied artworks. The author's name

shall be indicated when exhibiting the work. From these rules it can be established that the ownership title of fine art

and the economic rights are separated from each other and that the interests can be conflicted where the owner of

fine art and the subject of the copyrights are different people.

It is not necessary to obtain the consent of the author or remunerate the author for displaying a work kept in a public collection.

From 1 January 2012 a new provision has been included in Chapter IV on free uses of the work and other limitations

on copyright of the Hungarian Copyright Act, according to which, where an original artwork is exhibited or transferred

with the participation of an art dealer, then such artworks may be freely reproduced and distributed for the purpose of

advertising the event and to the extent that it is justified by the promotion of the event, provided that it is not intended

to earn or increase income even in an indirect manner

For other reproduction purposes, the author's or his legal successor's or HUNCART Collecting Society of Hungarian

Visual Artists' prior authorisation will be required in future, as well.

Fine art pictures, applied artworks, as well as pictures of industrial designs and photographic works, can be used for

scientific or educational lectures and classroom instruction without remunerating the author or obtaining his consent.

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19. What is the due diligence required from the seller?

Before purchases and auctions, the dealers and auctioneers must check the data for the work of art concerned on the

homepage of the Cyula Foster National Centre. Art dealers automatically receive the Stolen Works of Art Newsletter

which the authority posts upon each new registration in the database, including the data and photographs pertaining

to the theft in question and to that of stolen objects.

Dealers and auctioneers usually have their own team of experts for the examination of the work's origin.

20. Are there any particular standards of due diligence applicable to the trade (dealers and auctioneers), extending to collectors?

There are no particular written standards of due diligence applicable to the trade, extending to collectors; dealers and

auctioneers comply with the mandatory regulations and with the ethical codes/standards of the different associations

in which they are members.

21. Is there a regime of temporary import for sale? -

If there is a temporary import of a cultural good for sale from a state outside the EU into Hungary then the customs

proceeding will be started on the Uniform Customs Declaration (EV) and the imported cultural goods will be re-

exported within 24 months.

22. What are the remedies against a defaulting buyer (private treaty sale and public auction)?

At public auction, the buyer usually immediately pays the full purchase price, including the hammer price and the

auction commission (and any other tax or contribution required by law), or the buyer gives a deposit as a sign of

commitment by conclusion of the contract. According to the Hungarian Civil Code, the buyer as the person responsible

for the failure of performance shall forfeit the deposit that he has given. Waiver of the right to demand a refund of the

deposit shall not constitute an exemption from the consequences of breach of contract; however, the amount of the

deposit shall be included in the indemnification. If the buyer is unable to offer any reasonable excuse for his default,

he shall be liable for all damages incurred to the object of the service during the period of default, unless he is able to

prove that such damage would have occurred regardless. In respect of the remaining purchase price, the defaulting

buyer shall pay default interest according to the regulations of the Civil Code.

The auction house or other seller shall be entitled to demand performance, or, if performance no longer serves

his interest, he is entitled to rescind the contract irrespective of whether or not the defaulting buyer has offered an

excuse for his default. It shall not be necessary to prove the cessation of an interest in performance if, according to the

agreement of the parties or due to the imminent purpose of the service, the contract had to be performed at a definite

time and none other, or if the seller as obligee has stipulated a reasonable deadline for subsequent performance, and

this period elapsed without result. . . . . ...

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ART PHILANTHROPY - •

23. What are the essential rules (other than tax rules) and practices in relation to loan, deposit and donation to public museums?

Museums may lend or borrow cultural goods for a determined period but for a maximum of five years on the basis

of a written agreement. The inventonal record on the loaned cultural goods shall be attached to this agreement. It

is possible to stipulate a fee for the loan and other financial security in the agreement. This loan agreement shall

include the following: the requirements on protection of conditions securing the loaned cultural goods including the

packaging and the terms of conveying; climatic conditions; the procedure following any damage to the cultural goods;

the insurance policy concluded by the borrower; and the eventual necessary escort of the museologist or the police or

other armed forces.

A public museum may receive cultural goods belonging to its collection which are owned by another party for a limited

duration based on written agreement. For such a deposit, the museum may stipulate a specific fee for the museum

deposit in the agreement which shall at least cover the expenses involved. In the absence of provisions stipulating

otherwise, the depositing party may only claim return of the deposited goods prior to the expiration of the period

set forth in the agreement, if the return of such goods does not harm the museum's cultural education or scientific

activities. The position statement of the Directorate shall be authoritative in disputes regarding this issue. During the

deposit period specified in the agreement, the museum may research, exhibit the cultural goods under deposit and

publish information on them.

Public museums usually conclude a written agreement with the donor or the donor remembers a public museum in

his will according to the provisions of the Hungarian Civil Code.

24. What is the legal regime for private foundations and private museums?

Museum institutions may be established by any legal or private person. The licence to operate is issued by the culture

minister The procedure for the issuance of this licence starts with the application by the maintainer The licence will be

issued if the assets of the museum are cultural assets and the maintainer ensures the personal and material conditions

necessary for their continuous and proper functioning. The maintainer of a museum institution can be a natural person,

unincorporated business association (eg, limited partnerships), or a business association with legal personality (eg,

private limited liability companies). A museum is an institution having scientifically structured collections of cultural

goods, which the institution collects, conserves, processes, researches, exhibits and publicises. The cultural goods in

the inventory of a museum are subject to restrictions in terms of marketing. The fulfilment of the operating licence is

controlled by a professional inspector mandated by the minister . . . .

According to the Hungarian Civil Code, private persons, legal persons, and unincorporated business associations

('founders') shall be entitled to form a foundation in a charter in order to serve a long-term public interest. A foundation

may not be formed for the principal purpose of performing economic activities. A foundation must have allocated

sufficient assets for achieving its objectives and is a legal person. A foundation is deemed established once it has been

registered by the court and may commence operations on the operative date of the resolution on its registration. A

founder may not withdraw a foundation after registration and shall be entitled to designate a managing body in the

charter or create a separate organisation for such purpose. A managing body (organisation) in which the founder is

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entitled, directly or indirectly, to exercise any controlling influence regarding the utilisation of the foundation's assets

may not be appointed or established. The foundation shall be liable for any damages caused to a third person by the

managing body (organisation) or an officer (member) thereof in the course of fulfilling its responsibilities

TAX 25. Is wealth tax levied on art and other cultural property assets?

At present, Hungary does not operate a system of wealth tax levied on art and other cultural property assets.

26. Is there a capital gains tax on their disposal or any other event?

Although there is no separate capital gains tax in Hungary, individuals as well as businesses must pay income tax on

any capital gains derived from the sale of movable as well as immovable assets. As such, this also applies to cultural

property. For individuals, the personal income tax rate is 16 per cent. Businesses must include the gains in their

corporate income tax base which is taxable at 10 per cent and 19 per cent progressive rates.

27. Is there a gift and/or inheritance tax?

Yes, there is a gift and inheritance tax, at the general rate of 18 per cent on the total value of the gift/inheritance.

There are, however, a number of exemptions and reliefs available. For example, any gift given for scientific, artistic,

educational, cultural and public welfare purposes, and the acquisition of property on the basis of public commitment

(foundation), as well as acquisition of pecuniary value from public gifts serving charitable purposes is exempted from

gift duty.

28. What are the tax breaks, if any, available when loaning/depositing, gifting or bequeathing art or other cultural property to public institutions?

There are no explicit tax breaks available with regard to loaning or depositing works of art or other cultural property to

public institutions. However, certain tax breaks and exemptions may apply upon gifting property to public institutions.

The two most important are the possible exemption from VAT as well as the possibility for businesses that are subject

to the corporate income tax to recognise, as a tax deductible expense, the expenses connected to such a gift. Subject to

further conditions, a further reduction of the tax base may also be possible. • , • -

Typically, the above benefit of treating such works as tax deductible items apply only insofar as the recipient is a public

benefit entity, or the gift is provided in the framework of an undertaking for the benefit of the public. In order to get full

VAT exemption and the extra tax base reduction, however, further conditions also need to be met (most prominently

the holding of a certificate from the recipient with certain statutory details). Museums and other public institutions may

or may not fulfil the relevant criteria, ie depending on the exact legal framework in which they operate.

29. What is the taxation of private foundations and private museums upon creation/ endowment and thereafter?

Insofar as private museums are concerned, their tax treatment depends on the legal framework in which they operate -

ie the tax regime that applies to them depends on their legal form, rather than their function of being a 'museum'. For

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example, they may choose to operate as a for-profit or a non-profit company, a foundation, an association, etc.

With regard to private foundations, generally speaking, they are subject to corporate income tax. However, they are not

required to pay tax on that part of the income which they generate within the framework of non-business activities. As

such, as a main rule, they would not be taxable on gifts received for the purposes of their public benefit (non-business)

activities, ie for the purpose for which they were created. In addition, private foundations enjoy further tax exemptions

also with regard to income generated through their business activities (which may, however, only be conducted on a

complementary basis). The extent of these exemptions primarily depends on whether the foundation: (i) is registered

as a public benefit entity; and (ii) whether it has any public debts. For example, a public benefit foundation is effectively

tax exempt if its business income does not exceed 15 per cent of its total income.

USEFUL PRACTICAL INFORMATION/REFERENCES

30. Principal laws and regulations

Fundamental Law of Hungary entered into force on 1 January, 2012.

Act IV of 1959 on the Civil Code of Hungary.

Act LXIV of 2001 on Protection of the Cultural Heritage.

Act LXXX of 2001 on the return of unlawfully removed cultural goods.

Act XXVIII of 2001 on publication of the 1995 UNIDROIT Convention.

Act LXXVI of 1999 on Copyright.

Act CXL of 1997 on the Protection of Cultural Coods, Museum Institutions, Public Library Services and Cultural

Education.

Act XCV of 2012 on the Special Protection of Borrowed Cultural Coods.

Act CXXVII of 2007 on Value Added Tax.

Act IV of 1978 on Criminal Code.

Government Decree No. 17/2001 on Restriction on Export of Cultural Objects.

Decree 2 of 1979 on the publication of the 1970 UNESCO Convention.

Regulation 14/2010 (XI.25.) of the Ministry of National Resources on the authorisation of the cultural goods.

Decree 14 of 1957 on 1954 Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict.

Act XXIX of 2005 on the Second Protocol to the 1954 Hague Convention.

Council Regulation (EC) No 116/2009 of 18 December 2008 on the export of cultural goods.

Council Directive 93 /7 /EEC of 15 March 1993 on the return of cultural objects unlawfully removed from the territory of

a member state.

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31. Selected law enforcement authorities

Cyula Foster National Centre - www.to/i.hu

Hungarian Police force - www.po/(ce./iu

National Tax and Customs Administration of Hungary - ivww.en.no'/.gov.hu

National Board against Counterfeiting - wivw.hom/s/tose//en.hu '

32. Selected collector and trade associations

Kieselbach Gallery and Auction House with comprehensive database of Hungarian Artists and online gallery -

www.kie5elbach.hu/?lang=enen

Judit Virag Gallery and Auction House - hnp://viragjuditgalena.hu/en/

Polgar Gallery and Auctions - www.polgar-galena.hu/en

Nagyhazi Gallery and Auction House - www.nagyhazi.hu/english/index.php

Abigail Gallery and Auction House - www.abigail.hu/en

BAV Bizomanyi Kereskedbhaz - www.bov.hu/

Belvedere Salon, Gallery and Auction House - hnp://belvedereszalon.hu

Ernst Gallery - wwvj.emstgaleria.hu/english/index_eng.html

Villas Gallery and Auction House - www.w7/osgo/eria./iu/

Moro Antik - http://moroantik.hu

Nemes Gallery - http://nennesgaleria.hu.

The First Hungarian Painting Expert's Office - mviA/.Wro/ot.hL/

The Hungarian Contemporary Art Galleries Association - www.tortorsgo/eria(c/itj/en.

The Hungarian Museum Association - www.pu/sz(fy./iu .

TheHomePageof theHungar ianMuseums-www.museum.hu . V, .

AxioArt, Art trade on the Internet - www.ox/oart.com , , ,

The AntaFLusztig Collection - wwH'.modemorf./iu/.''n/e/'.'=en

The Laszlo Karoly Collection - wiw.co/'//osz/oco//ect/on.hu .• ,. .

The Laszlo Vass Collection, Veszprem - www.vosscoWect/on.hu

The AkosVorosvary Collection, Tapolca-Diszel - www./orvon/tor.com. . . .