According to the decree, the government will impose special taxes as of 1 July 2022 to overcome the financial difficulties triggered by the Ukrainian crisis. The aim of the new taxes therefore is to improve the state's income and the stability of the national economy. Below, we have summarised the key elements of the new taxes.
1. Special tax for banks
A special tax is payable by banks on their net turnover. The rate of the tax in 2022 is 10 % and in 2023 it will be 8 %.
2. New transaction duties
Banks and investment firms must pay a transaction duty after the purchase of a financial instrument with an ISIN issued by KELER Central Securities Depository Limited Liability Company. The rate of the transaction duty is 0.3 % of the base (i.e. the purchase price of the financial instrument credited on the securities account), but not more than HUF 10,000 per purchase. Investment services provided by the Hungarian State Treasury or the institution operating the Postal Clearing Centre are exempted from the duty.
The decree further broadens the scope of the financial transaction duty by making it applicable to payment services providers, credit and money lending, currency exchange and currency exchange intermediation services in Hungary as cross-border services.
3. Special tax for the insurance sector
Insurers must pay additional insurance tax for the period between 1 July 2022 and 31 December 2023. The additional tax is based on the amount of the insurance premium. In the case of certain affiliated companies (e.g. if the affiliation was created by a division or separation after 1 June 2022), the tax base will be added together and the amount of the tax to be paid will be apportioned between them.
The rate of the additional tax varies based on the amount of the insurance premium of
- casco insurance, property and casualty insurance and compulsory third-party liability motor insurance
- in 2022 lies between 4 % and 14 %;
- in 2023 lies between 2 % and 7 %;
- insurance services in the life insurance classes:
- in 2022 lies between 2 % and 6 %;
- in 2023 lies between 1 % and 3 %.
4. New taxes in the energy and mining sector
Producers of petroleum products (most notably MOL) will be subject to a tax based on the price difference between the monthly average purchase price of oil originating from the Russian Federation and of Brent crude oil realised in 2022 and 2023. The basis of the tax will be the price difference multiplied by the oil amount delivered from Russia and the applicable tax rate is 25 %.
Electricity generators producing electricity using renewable energy sources and entitled to participate in the mandatory off-take / feed-in tariff (KÁT) scheme or in the METÁR scheme will become subject to a new tax if they leave or fail to enter the above subsidy schemes in 2022 or 2023. In our understanding, the new tax is practically a complimentary rule to the Government's decision at the end of May 2022 to prohibit subsidised generators from leaving these subsidy schemes and entering the free market. The prohibition left certain loopholes in the applicable legislation potentially allowing generators to circumvent this prohibitive tax.
If an electricity generator becomes subject to the tax, it will be required to pay taxes on the difference of the higher electricity prices available on the free market and the lower off-take or strike prices. The basis of the tax will be the price difference multiplied by the generated electricity amount with an applicable tax rate of 65 %. The new tax will not apply to power plant units with an installed capacity of less than 0.5 MW.
The new act modifies the income tax rules for energy suppliers, commonly known as the Robin Hood tax. In 2022 and 2023, payers of the Robin Hood tax will also include producers of bioethanol, producers of starch, starch products and producers of sunflower oil. The rate of the Robin Hood tax is 31 %.
Also amended are the rules concerning the mining royalty, which with respect to the extraction of crude oil and natural gas will increase significantly in 2022 and 2023. In addition, mining licence holders are required to maintain the amount of extracted natural resources for these years at least at the same level as 2021.
5. Tax imposed on the telecommunications sector
A new extraordinary tax has been introduced on telecommunications service providers. This turnover type tax is expected to apply to, among others, providers of telephone, internet and cable television services, but the range of taxpayers is to be clarified in more detailed implementation rules or guidelines.
The relevant tax base will be the service providers' turnover in 2022 and 2023 respectively. The applicable tax rate will be
- 0 % for turnover below HUF 1bln;
- 1 % for turnover exceeding HUF 1bln and below HUF 50bln;
- 3 % for turnover exceeding HUF 50bln and below HUF 100bln; and
- 7 % for turnover exceeding HUF 100bln.
6. New departure tax
A special tax will be payable by ground handling companies based on the number of passengers departing from Hungary, with the exception of transit passengers. Although the subjects of this tax are the ground handling companies, they will naturally further impose the tax on the airlines.
The rate of the new special tax will depend on the passengers' final destination.
- HUF 3,900 if the passenger's final destination is within the European Union, also Albania, Andorra, Bosnia and Herzegovina, Northern Macedonia, Iceland, Kosovo, Liechtenstein, Moldova, Monaco, Montenegro, the United Kingdom, Norway, San Marino, Switzerland, Serbia and Ukraine;
- HUF 9,750 for other destinations.
In the retail sector substitute taxes will be payable in 2022 and new tax rates will be applied in 2023. In the tax year including 1 July 2022, tax subjects in the retail sector must pay a one-off substitute tax equalling 80 % of the yearly amount of the retail tax calculated based on the tax payable in the tax year 2021. The substitute tax is payable by 30 November 2022. From the tax year commencing in 2023, the new rates of the retail tax will be:
- 0 % after the tax base [i.e. the net sales revenues of the taxpayer] not exceeding HUF 500m;
- increased from 0.1 % to 0.15 % after the tax base exceeding HUF 500m but not exceeding HUF 30bln;
- increased from 0.4 % to 1 % after the tax base exceeding HUF 30bln but not exceeding HUF 100bln;
- increased from 2.7 % to 4.1 % after the tax base exceeding HUF 100bln.
For 2022 and 2023, distributors in the pharmaceutical sector will be obliged to pay an elevated 28 % tax rate for pharmaceutical products exceeding a producer price of HUF 10,000 instead of the 20 % tax currently in force. If the producer price of the pharmaceutical product does not exceed HUF 10,000, the tax rate will remain 20 %.
Other tax modifications
The new rules also concern the public health product tax levied on certain sugary and salty products and the vehicle tax levied on company cars, the rates of which will be increased. The Hungarian Government is also increasing the rate of the excise tax of several alcoholic and tobacco products.
However, the new decree does not contain any provisions on the advertisement tax, despite it being announced previously. It is assumed that this latter tax will be effective only as of 1 January 2023.