As you will have heard, the Government adopted the previously announced measures at its extraordinary meeting in Sopron on the Pentecost weekend, the detailed rules of which are set out in Government Decree 197/2022 (4 June). In addition to the sectoral special taxes affecting eight sectors, the Extra Profits Tax Decree also includes other tax measures (e.g. company car tax, excise duty). The changes are briefly described below, most of which will enter into force on 1 July this year.
Sectoral, sectoral specific taxes:
Banking sector
Credit institutions and financial firms will be subject to a new special tax, which will be Act C of 1990 on local taxes on their net turnover for the previous year. The tax rate is 10% in 2022 and 8% in 2023.
In addition to the special tax, this sector will also be burdened by the extension of the transaction tax. According to the decree, securities trading (purchases) will also be subject to a duty of HUF 0.3% per purchase, up to a maximum of HUF 10,000. As an exception to the rule, the transaction will be exempt from duty if the investment service is provided by the Hungarian State Treasury or by an institution operating the Postal Settlement Centre.
In addition to the extension of the scope of the transaction tax, the maximum amount of the existing financial transaction tax will be increased from HUF 6,000 to HUF 10,000 (the rate will remain HUF 0.3%). The regulation extends the financial transaction tax to persons providing cross-border services in Hungary, so that financial intermediaries such as Revolut and Transferwise will also be subject to the tax.
Energy sector
A special tax on the production of petroleum products is introduced as a new tax, based on the difference between the price of crude oil originating in the Russian Federation and the world market price of crude oil multiplied by the quantity of crude oil in barrels purchased from the Russian Federation during the month in question. The tax rate is 25%.
The sector is also subject to a special tax on producers of renewable energy products (eligible for compulsory purchase under the CCCTB and METÁR Regulations), the details of which are set out in Article 3 of the Regulation.
On a transitional basis, for the tax years 2022 and 2023, the manufacturing industry will also be subject to the Robin Hood tax, i.e. the scope of the tax will be extended to bioethanol producers, starch and starch product producers and sunflower oil producers.
There will also be a significant increase in the amount of the mining benefit and, in some cases, changes to the methodology for calculating the benefit.
Insurance sector
For the period from 1 July 2022 to 31 December 2023, a surcharge at the flat rate will be introduced. Its base will include premiums from life insurance policies in addition to those already taxed under the existing insurance tax (premiums from non-life insurance policies), i.e. the range of premiums to be taxed will be extended. The rate of the additional tax varies according to the type of insurance and the year (1-14%).
Retail sector
For this sector, a hybrid solution has been adopted: for 2022, the companies concerned will have to pay a one-off, lump-sum additional tax equal to the tax rate 80% for 2021, while for 2023 the existing banded rates will increase. The tax-free band will remain unchanged:
- from 0.1% to 0.15% for the part between HUF 500 million and HUF 30 billion tax base,
- between HUF 30 billion and HUF 100 billion, from the current 0.4% to 1%, while
- Above HUF 100 billion, the tax rate will increase from 2.71TTCT to 41TTCT.
Telecommunications sector
As in the insurance and retail sectors, the telecoms sector will have to pay a surcharge. The telecoms surcharge is based on the net turnover for the year under review, as in the case of the special tax on the banking sector, in accordance with the Local Taxes Act. The tax rate increases in a graduated manner. The amount below HUF 1 billion will be tax exempt, the part between HUF 1 and 50 billion will be subject to a surcharge of 1%, the part between HUF 50 and 100 billion will be subject to a surcharge of 3%, while the part above HUF 100 billion will be subject to a surcharge of 7%.
Pharmaceutical sector
The special tax is payable by the distributor of the medicinal product (the holder of the marketing authorisation for the medicinal product or, if the distributor does not carry out distribution activities in the country, the distributor on the basis of an agreement with the distributor and approved by the state tax authority). The tax is payable on publicly funded medicinal products and infant formulae distributed in pharmacies and remains at 20% for medicines with a producer price of less than HUF 10,000, while it increases by 8% to 28% for medicines with a producer price of more than HUF 10,000.
Airlines
The airline contribution will be payable by the economic operator providing the groundhandling services, based on the number of domestic passengers of the aircraft served, excluding transit passengers.
The contribution is HUF 3900 or 9750 per passenger, depending on the final destination. The destinations for which the contribution is lower are specified in the Regulation. These include the countries of the European Union, Norway, Switzerland and Great Britain.
Advertiser
Contrary to previous expectations, the regulation does not contain rules on advertising tax. This is presumably because the Government would only reintroduce the tax from 1 January 2023.
The other measures cover four main areas
The amount of company car tax payable will increase significantly, almost doubling, between 1 July 2022 and 31 December 2022. The monthly rate of company car tax is set out in Annex 1 to the Regulation. The new rates are:
| A | B | C | D | |
|---|---|---|---|---|
| 1. | Power (kW) | “for environmental class labels ”0“ to ”4" | “for environmental class labels ”6“ to ”10" | “For environmental class symbols ”5”, “14″-”15" |
| 2. | 0-50 | HUF 30 500 | 16 000 forints | 14 000 forints |
| 3. | 51-90 | 41 000 forints | HUF 20 000 | 16 000 forints |
| 4. | 91-120 | 61 000 forints | 41 000 forints | HUF 20 000 |
| 5. | Over 120 | HUF 81 000 | 61 000 forints | 41 000 forints |
- Also from 1 July 2022, the rate of the public health product tax will change. For example, the tax rate for sugary drinks will increase from HUF 15/litre to HUF 23, but the tax rate for savoury snacks (HUF 300/kg to HUF 390) and flavoured beer (from HUF 25/litre to HUF 33/litre) will also increase. Details are set out in Annex 2 to the Regulation.
- The law on excise duty is also amended. The decree lists the excise goods affected by the tax increase (energy, tobacco, alcohol) and the rate applicable from 1 July 2022 and, in some cases, from 1 January 2023.
- The rules on simplified employment are also changing. As a result of the amendment, from July 2022, the rate of tax payable by the employer of an employee in simplified employment will be linked to the minimum wage applicable on the first day of the month.
The above summary is for information purposes only and does not include the detailed rules of the Regulation. If you have any questions about a specific sectoral tax or other changes, please do not hesitate to contact our colleagues.
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