Hungary introduces sector specific taxes to companies generating "extra profits"

Hungary

On 25 and 26 May, the recently re-elected Hungarian government announced new sector specific taxes for 2022 and 2023 as a response to difficulties caused by the war in Ukraine and the increased prices of raw material.

According to current information, the following eight sectors will be affected by the new taxes:

  • Bank sector:

  • Banks would be required to pay extra tax on their interest margin. The scope of the financial transaction duty will be extended and securities transactions will be subject to this tax.

  • Insurance sector:

  • The tax rate is expected to increase without changing the tax base.

  • Energy sector:

  • The government will triple the amount of mining royalty payable by companies engaged in the extraction of petroleum and natural gas and the calculation method of the royalty will also change. Part of the profits on refinery margins will be subject to extra tax. Higher taxes will be levied to bioethanol and biofuel producers.

  • Retail sector:

  • The tax rates applicable in the two highest tax brackets will increase: from 2.7% to 4.1% for taxpayers above HUF 100 billion net sales revenues and from 0.4% to 1% for taxpayers in the HUF 30-100 billion net sales revenues bracket.

  • Telecommunication sector:

  • New turnover type tax would be introduced on roaming, internet and cable TV traffic. Details have yet to be finalised.

  • Airlines:

  • Departure and check-in fees will be levied to ground-handling service providers. These extra fees (approximately EUR 10-15 per journey) will be indirectly borne by the passengers.

  • Pharmaceutical distribution sector:

  • The pharmaceutical distribution sector must pay 24% tax instead of the current 20% after the reimbursement from the Healthcare Fund for subsidised pharmaceutical products.

  • Advertisement tax:

  • The advertisement tax will be reimposed on 1 January 2023 without any alteration of the tax base or the tax rate.

In addition to the above, the government expects to collect additional resources through the increase of the company car tax; the excise duty rates on tobacco products and alcohol; the public health product tax; and the tax payable after workers under the simplified employment scheme.

Further details about the new taxes will come after the respective rules are officially adopted and announced in the official Gazette. For more information on taxation in Hungary, contact your regular CMS advisor or local CMS experts.

The article was co-authored by Diána Galambosi.