Pursuant to Section 3, point 53 of Act CXVII of 1995 on Personal Income Tax (hereinafter:
PIT Act), leasing arable land means lease of land by a private individual owner or beneficial
user of arable land for agricultural, forestry or fishing purposes, based on a written
agreement for one or more years for which the owner or beneficial user is paid a fee.
Income from the leasing of arable land - if not tax exempt - is recognized as income taxable
separately on the whole at the tax rate of 16 per cent. Such income is tax exempt if the term
of the lease, as stipulated in the relevant contract (agreement), is five years or more.
If the above-specified contract is terminated for any reason (not including reasons beyond the
parties’ control or the summary termination of the lease contract) within five years the tax
that was not paid under the exemption must be declared and paid with a default penalty. The
private individual must assess and pay the tax, increased by default penalty, as a liability for
the year of termination of the contract.4