The National Tax and Customs Administration (NAV) of Hungary has announced its inspection plans for 2025, specifically focusing on trust structures known as Bizalmi Vagyonkezelés (BVK).

This initiative aims to uncover legal transactions primarily intended to exploit tax advantages that do not align with the legal principle of proper conduct.

In response, István Illés, a board member of Apelso Trust, stated during a recent event by MBH Bank's Private Banking division that companies seriously engaging with the sector could potentially benefit from the clarity that a focus by the tax authority might bring to the market.

The concept of trust management, or BVK, was introduced in Hungary in 2014 as a local adaptation of the Anglo-Saxon trust system.

It allows individuals or legal entities to transfer assets to a trustee, who manages these assets on behalf of specified beneficiaries.

The structure is akin to banking practices; the trustee manages the assets in their name but for the benefit of others.

A significant advantage of BVK is that it prevents asset dissipation among heirs in case of disputes, as the trustee sets terms for the timing and amount of distributions to beneficiaries.

This is particularly beneficial for maintaining large fortunes, especially when the original owners are no longer involved in asset management.

However, the trust management market has faced dilution in recent years, with an increase in misconceptions surrounding BVK.

Akos Pal Barati, a representative from Jalsovszky Law Firm, noted that many lawyers perceived BVK merely as a contractual relationship, mistakenly thinking creating such contracts would be straightforward for legal firms.

These cases often prioritized tax incentives, with recent statistics indicating that two-thirds of newly established BVK structures focused primarily on tax planning rather than asset protection or separation.

The current tax regulations dictate that the assets recorded at market value must remain within the trust for five years before tax-free distribution can occur.

Contrary to previous interpretations, the NAV clarified that assigning dividend claims to a BVK could trigger tax obligations for the asset transferor, closing a previously exploited loophole for tax avoidance.

Amid these developments, the management of notable global corporations such as Ford, Nestlé, and Walmart illustrate how trust structures can effectively manage family wealth across generations.

These companies are often led by trust managers who operate independently of the original owner families.

Experts assert that BVK structures are most effective when utilized as long-term wealth planning tools rather than as temporary tax avoidance mechanisms.

Accordingly, it is essential for both asset transferors and managers to understand the legal and tax implications involved in setting up and operating a BVK, in addition to adhering to the stipulations set forth by the NAV.

The significant increase in NAV oversight is likely to impact the future development of BVK in Hungary.

Stakeholders within the market must concentrate on ensuring that BVKs serve legitimate wealth planning and protection purposes instead of merely seeking immediate tax benefits.

As part of a broader financial service strategy, MBH Bank has recently expanded its offerings to include family wealth planning services, responding to a growing demand for alternatives in asset diversification and preservation.

The bank is collaborating with various partners, including a firm specializing in precious metal trading and plans to engage with experts in the art market.

This shift emphasizes a more holistic approach to family wealth management among affluent clients, moving beyond simple tax optimization tactics.

The response reflects a broader global trend in which trust structures are used not only for tax efficiency but as integral components of long-term asset management and growth.