Corporate Tax News Issue 63 - August 2022

Extra profits tax levied on various sectors

The Hungarian government announced on 26 May that it was introducing temporary “special taxes on extra profits” that apply to companies in the financial, petroleum, energy and airline sectors. The taxes will apply during 2022 and 2023 and are expected to generate revenue of about HUF 800 billion per year. The levies are designed to address Hungary’s revenue deficits and finance the creation of funds to protect utility costs and the national defense. Details of the measures were published on 4 June.

The extra profits taxes apply as follows:

  • Credit institutions, financial enterprises and investment companies are subject to the special profits tax, which is 10% of net sales determined on the basis of the 2021 annual report for 2022 and 8% of net sales in 2022 for 2023. The special tax will have to be assessed and declared for the first time by 10 October 2022, and 50% of the tax liability in 2022 will also be due by that date.
  • A special tax for petroleum producers at a rate of 25% will apply to the taxable base, determined as the price differential between crude oil originating from Russia versus from the world market and the quantity of crude oil purchased from Russia in barrels each month. The tax must be paid for the entirety of 2022. The tax is due for each month in the first half of 2022 and must be paid by 20 September 2022.
  • A 25% tax applies to producers of petroleum products, with the tax base being the price differential of petroleum imported from Russia rather than other countries and the amount purchased from Russia in barrels in the relevant month. The special tax is due for each month in the first half of 2022 and must be paid by 20 September 2022.
  • A 65% tax is levied on electric power plants. For plants generating electricity with an installed capacity exceeding 0.5 MW, the tax base is the difference between the revenue from the transfer of the input energy and the mandatory purchase price or applicable subsidised price. Power plants using solid biomass do not have to pay the special tax.
  • The special tax payable by air passenger transport companies is based on the destination and the number of passengers and applies for the first time on flights departing from Hungary on 1 July 2022. The amount of the contribution is HUF 3,900 per passenger travelling to Albania, Andorra, Bosnia and Herzegovina, Kosovo, Lichtenstein, Moldova, Monaco, Montenegro, Northern Macedonia, Norway, San Marino, Serbia, Switzerland, UK, Ukraine and EU member states, and HUF 9,750 per passenger travelling to all other destinations.

Dóra Kardos