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 are presented in two parts – the first part was published on 4th July 2022.


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


1. Public health products’ tax (the “Neta”)

The Decree has also increased the tax rate of products subject to Neta from 1 July 2022 and extended its scope to several new product categories: accordingly, "delicatessen" and "pre-packaged sweet or savoury pasta" are the new product categories subject to Neta. The scope of taxable products are still to be determined by the customs tariff number and the salt or sugar content – thus, a dual rate may be applicable for some products depending on whether the sugar content of the product exceeds the prescribed limit. On the other hand, alcohol products under the excise duty regime are no longer subjects to the Neta.

After 1 July 2022, the Decree prescribes the payment of the following amount of tax in respect of the products subject to Neta:

Product subject to Neta Old tax rate
New tax rate
Soft drinks (except syrups) 15,- HUF/l 8,- HUF/l, or 23,- HUF/l (depending on the sugar or sweetener content)
Syrup 240,- HUF/l 105,- HUF/l or 310,- HUF/l (depending on the sugar or sweetener content)
Energy drink 50,- HUF/l, or 300,- HUF/l 65,- HUF/l or 390,- HUF/l (depending on the sugar or sweetener content)
Prepacked sugary products (except cocoa powder) 160,- HUF/kg 65,- HUF/kg or 210,- HUF/kg (depending on the sugar or sweetener content)
Cocoa powder 85,- HUF/kg 40,- HUF/kg and 110,- HUF/kg (depending on the sugar or sweetener content)
Salty snacks 300,- HUF/kg 390,- HUF/kg
Food flavouring 300,- HUF/kg 390,- HUF/kg or 390,- HUF/l
Flavoured beer; alcoholic refreshments 25,- HUF/l 10,- HUF/l or 33,- HUF/kg (depending on the sugar or sweetener content)
Jam 600,- HUF/kg 260,- HUF/kg or 780,- HUF/kg (depending on the sugar or sweetener content)
Delicacies - 65,- HUF/kg or 210,- HUF/kg (depending on the sugar or sweetener content)
Pre-packaged sweet or savoury pasta - 65,- HUF/kg or 210,- HUF/kg (depending on the sugar or sweetener content)

 

2. Telecommunications surtax

Based on the provisions of the Decree, electronic communication service providers are obliged to pay telecommunications surcharge in 2022 and in 2023 based on their net sales revenue(1), using progressive scale rate as follows:

Tax base Surtax rate
For the part of the tax base not exceeding HUF 1 billion 0 %
For the part of the tax base exceeding HUF 1 billion but not exceeding HUF 50 billion 1 %
For the part of the tax base exceeding HUF 50 billion but not exceeding HUF 100 billion 3 %
For the part of the tax base exceeding HUF 100 billion 7 %

The tax base of the surtax shall be the net sales revenue – as defined in Act C of 1990 on Local Taxes – from electronic communications service provision activity in the current tax year for the tax year including 1st July 2022, and the net sales revenue from electronic communications service provision activity in the tax year starting in 2023 for the tax year starting in 2023, on the stipulation that in certain cases the net sales revenue of affiliated companies in Hungary shall be calculated together. Taxpayers shall pay tax advance once a year and the surtax shall be assessed, declared and paid by the last day of the fifth month of the year following the relevant tax year.

(1) The net sales revenue forming the tax base of the local tax shall be taken into account here.

 

3. Insurance surtax

For the period between 1st July 2022 and 31st December 2023, insurance companies are obliged to pay insurance surtax. The tax base of the surtax shall be the amount of the insurance fees originating from the various insurance services, the rate thereof shall be as determined by the Decree – we have summarised this in the below table:

Tax base Surtax rate 
  In case of insurance fees originating from the provision of services under Act CII of 2012 on Insurance Tax ("Insurance Tax Act") In case of insurance fees originating from the provision of insurance services under Act LXXXVIII of 2014 on the Business of Insurance ("Insurance Act"), as defined in Insurance Tax Act
For the part of the tax base not exceeding HUF 1 billion in 2022 4 % 2 %
For the part of the tax base exceeding HUF 1 billion but not exceeding HUF 18 billion in 2022 8 % 3 %
For the part of the tax base exceeding HUF 18 billion in 2022 14 % 6 %
For the part of the tax base not exceeding HUF 1 billion in 2023 2 % 1 %
For the part of the tax base exceeding HUF 1 billion but not exceeding HUF 18 billion in 2023 4 % 1,5 %
For the part of the tax base exceeding HUF 18 billion in 2023 7 % 3 %

With the introduction of this surtax, insurance companies have an obligation to file a tax advance statement until 30th November 2022 and 31st May 2023. Taxpayers are obliged to declare and pay the tax calculated in accordance with the above rates by 31st January 2023 and 31st January 2024. When determining the tax of affiliated taxpayers, the tax bases shall be added together and the amount of tax calculated on the basis of the result shall be distributed between them in the proportion of the proportion of their tax base in the aggregated tax base – this provision shall only apply if the affiliates became affiliated after 1st June 2022 by a de-merger, spin-off or transfer of assets.

 

4. Excise duty

Based on the provisions of the Decree, the tax rates for a significant number of excise goods –including many energy products, alcoholic products and tobacco products – have increased from 1st July 2022 – Articles 17-19. § of the Decree contain the full list thereof.


5. Surtax on retail tax

After 1st July 2022, taxpayers carrying out taxable activities under Act XLV of 2020 on Retail Tax are obliged to assess, declare and pay a surtax equal to 80 % of their retail tax for the tax years 2021 and 2022, in addition to their retail tax burden. For the tax year beginning in 2023, the basis of this tax shall be the net retail revenue, the rate of tax shall be as indicated in the table below:

Tax base Tax rate
For the part of the tax base not exceeding HUF 500 million 0 %
For the part of the tax base exceeding HUF 500 million but not exceeding HUF 30 billion 0,15 %
For the part of the tax base exceeding HUF 30 billion but not exceeding HUF 100 billion 1 %
For the part of the tax base exceeding HUF 100 billion 4,1 %


6. Mining royalty

For the tax years 2022 and 2023, the amount of mining royalty have increased based on the provisions of the Decree: the amount thereof shall be calculated from the value generated after the quantity of minerals exploited under an official permit, and the applicable rate shall be:

  1. 48 per cent for oil and gas exploited from hydrocarbon fields put into production before 1st January 2008 on the basis of a technical operating plan (except in certain cases provided by law);
  2. 42 per cent for natural gas sold at free market price and exploited from hydrocarbon fields which were put into production before 1st January 1998 and (except in certain cases provided by law);
  3. 36 per cent for oil and natural gas exploited from hydrocarbon fields put into production during trial production and from hydrocarbon fields put into operation after 1st January 2008 on the basis of a technical production plan (except in certain cases provided by law).

Moreover, the Decree includes further deviations from the provisions of Act XLVIII of 1993 on Mining applicable as a general rule, regarding – among other issues – the minimum extraction volume and technical amendments related to the above provisions.

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.