From 1st July 2022, several new taxes have been introduced, the details of which have been determined in Government Decree 197/2022. (VI.4.) on Extra-profit Taxes (the “Decree”). In our present newsletter, we summarized briefly the changes affecting the most important tax types. Considering the scope of the changes, the related rules will be presented in two parts – the second part is expected to be published on 11th July 2022.

New extra taxes have been introduced
with the effective date of 1st July 2022


1. Surtax on credit institutions and financial enterprises

Based on the net sales revenue according to Act C of 1990 on Local Taxes, credit institutions and financial enterprises are obliged to pay extra-profit tax during the years 2022 and 2023. The rate of the tax will be 10 % in 2022, 8 % in 2023, and the tax base thereof is the net sales revenue calculated on the basis of the annual report of the preceding tax year. These regulations shall apply first for the tax year beginning after 31st December 2021 which includes 1 July 2022. The surtax shall be declared in 2022 by 10th October 2022, and in 2023 by 10th June 2023. The tax shall be paid in two equal installments in 2022, and three equal installments in 2023 (until 10th October and 10th December 2022; and until 10th June, 10th October and 10th December 2023).

 

2. Extra-profit tax on the producers of petroleum products

The base of this extra-profit tax is the spread between the worldwide market price of crude oil and the price of the acquired crude oil in the respective month in question measured in barrels originating from the Russian Federation as defined in the Decree. The rate of tax is 25 % which has to be paid by the producers of petroleum products monthly in 2022 and 2023 until the 20th day of the month following the respective month, determined and declared through self-assessment. This extra-profit tax too shall be applied first for the full tax year beginning after 31st December 2021 and including the date of 1 July 2022. The amount of the extra-profit tax payable monthly for the period from 1st January 2022 to 1st July 2022 shall be declared and paid by the producers of petroleum products until 20th September 2022.

 

3. Extra-profit tax on the producers that leave KÁT and METÁR subsidy schemes and on the producers that leave the green premium-type aid scheme

The subjects of this extra-profit tax obliged to assess and declare are the following:

a) producers eligible for the mandatory offtake under the so-called KAT Decree (Government Decree 389/2007 (XII.23.));

b) producers eligible for the mandatory offtake under the so-called METÁR Decree (Government Decree 299/2017 (X.17.)); and

c) producers eligible for green premium type subsidy under the METÁR Decree, if the given producer’s contract for membership of the balance circle according to the KÁT Decree, the contract necessary to use the premium subsidy or the green premium type subsidy expires in the 2022 or 2023 tax year, or if they start their commercial operation in the 2022 or 2023 tax year, but do not enter into such contract required for the use of balance circle membership, premium support or green premium type support according to the KÁT regulation.

The rate of this tax is 65% that shall be paid by the subjects of this tax in 2022 and 2023 monthly, until the 20th day of the month following the respective month. The base of this tax shall be calculated as defined in Section 3. § Subsection (3) of the Decree.

 

4. Financial transaction tax (duty) of investment firms and credit institutions

Investment firms and credit institutions became obliged to assess, declare and pay tax after the purchase of a financial instrument specified in Act CXXXVIII of 2007 on Investment Firms and Commodity Dealers, and on the Regulations Governing their Activities Section 6 a) –c) with an ISIN code issued by KELER Central Depository Private Limited Liability Company for the benefit of a client account or own account. We would like to emphasize that in the case of this duty, the Decree does not contain any provision stating that this is an extra-profit tax payable only in the years 2022 and 2023, thus, it is currently conceivable that this duty will remain a tax obligation after this period as well.

The tax base is the value of the financial instrument that is the subject of the transaction and has been credited to the customer's account, the tax rate is 0.3% of the tax base but maximum HUF 10,000 per transaction; and the tax liability arises upon the financial completion of the transaction. The subjects obliged to pay such tax until 20th September 2022 for the first time. The purchase of a financial instrument shall be exempt from this duty if the investment service is provided by the Hungarian State Treasury or the institution operating the Postal Clearing Center.


5. Contribution of the airlines

The company performing ground handling services is obliged to pay this newly payable contribution after the air passenger transport activity according the Act XCVII of 1995 on Aviation. The contribution is based on the number of passengers of the aircraft served, and its amount depends on the passenger’s final destination – this amount is regulated in detail in Section 5. § Subsection (4) of the Decree, but it can range from HUF 3,900 to HUF 9,750.

The company obliged to pay such contribution shall be declared until the 20th day of the month following the respective month on the electronic form of the National Tax and Customs Administration for this purpose. The tax subject is obliged to pay such contribution of the airlines until the deadline for submitting the declaration.

In case of this contribution, the Decree also does not state that it is mandatory to pay it only in the years 2022 and 2023, therefore, it is also conceivable that those obliged to pay such contribution will have to reckon with a longer term special tax payment obligation.


6. Company car tax

Based on the Decree, from 1st July 2022 to 31st December 2022, the subjects of company car tax are obliged to pay a higher rate of company car tax. The amount of the company car tax remains linked to the engine performance and the environmental classification of the vehicle – the monthly amount of the company car tax changed as follows in the table below:

  A B C D
1. Engine performance (kW) In case of „0”-„4” environmental classification In case of „6”-„10” environmental classification In case of „5”; „14-15” environmental classification
2. 0-50 HUF 30,500 HUF 16,000 HUF 14,000
3. 51-90 HUF 41,000 HUF 20,000 HUF 16,000
4. 91-120 HUF 61,000 HUF 41,000 HUF 20,000
5. above 120 HUF 81,000 HUF 61,000 HUF 41,000


7. Extra-profit tax of pharmaceutical distributors

In 2022 and 2023, differing from the relevant provisions of Act XCVIII of 2006 on the General Provisions Relating to the Reliable and Economically Feasible Supply of Medicinal Products and Medical Aids and on the Distribution of Medicinal Products (the “Medical Distribution Act”), the holder of the marketing authorization of the medicinal product, in the event that it does not carry out domestic distribution activities, the distributor based on the agreement concluded by the distributor and approved by the tax authority, and all those who submit an application for social security reimbursement of the formula (if it is not the same as the distributor of the formula) after publicly funded medicines and formulas sold in pharmacies (excluding the medicines according to Section 38. § Subsection (1) of the Medical Distribution Act and formulas according to the legislation on breast milk substitute and breast milk supplementary formulas), for the part of the reimbursement subsidy based on the prescription turnover data for the relevant month, proportionate to the producer price (producer price / consumer price), the following payment obligation is imposed:

a) 20 % if the producer price of the medicinal products does not exceed HUF 10,000,

b) 28 % if the producer price of the medicinal products exceeds HUF 10,000.

The payment of this amount of increased tax obligation shall be made for the first time regarding payment obligations due by 20th July 2022.


8. Income tax of the energy suppliers

For the tax years 2022 and 2023, differing from the relevant provisions of Act LXVII of 2008 on the Increase of Competitiveness of Communal Heating, the processing industry producers1 shall also be considered subject to the energy suppliers’ income tax.

The processing industry producers are required to assess a tax advance based on the expected tax liability for the tax year of 2022 by way of self-assessment and the tax advance has to be declared until 20th September 2022 on the electronic form for this purpose; after that, starting with 20th September 2022, the tax shall be paid in equal monthly until the 20th day of each month. The processing industry producers shall apply the obligation defined in the Decree for the first time for the full tax year beginning after 31st December 2021 and including 1st July 2022.


9. Simplified employment

After the Decree entered into force, the amount of the daily itemized tax to be paid for employees working in the framework of simplified employment has also changed, as follows:

The processing industry producers are required to assess a tax advance based on the expected tax liability for the tax year of 2022 by way of self-assessment and the tax advance has to be declared until 20th September 2022 on the electronic form for this purpose; after that, starting with 20th September 2022, the tax shall be paid in equal monthly until the 20th day of each month. The processing industry producers shall apply the obligation defined in the Decree for the first time for the full tax year beginning after 31st December 2021 and including 1st July 2022.

 Form of employment Previous amount of itemized tax New amount of itemized tax Calculation based on the provisions of the Decree
Film industry extra HUF 4,000 HUF 6,000

3 percent of the minimum wage per employee for each calendar day of the employment relationship

Agricultural and touristic seasonal work HUF 500 HUF 1,000 0.5 percent of the minimum wage valid on the first day of the month per employee for each calendar day of the day of the employment relationship
Occasional work HUF 1,000 HUF 2,000 1 percent of the minimum wage valid on the first day of the month per employee for each calendar day of the employment relationship


As the amount of the itemized tax is tied to the minimum wage based on the Decree, the tax is expected to continue to increase along with changes in the minimum wage.

In case of non-compliance with the requirements affected by the above changes, the National Tax and Customs Administration may take actions against the subjects of the given extra taxes, on the basis of which imposition of high tax and other fines may not be excluded.

The purpose of this article is to provide a brief, concise information on certain issues. The content of this article is not exhaustive and does not constitute a legal advice.

Should you have any questions do not hesitate to rely on our services.