In force from 1^st March 2023: The last amendment to Government Decree No. 197/2022 (VI.4.) on Extra Profit Taxes (the "Amending Decree no. 2") which entered into force in December 2022, left many unanswered and questions open to interpretation, so everyone was eagerly awaiting for further clarification from the legislator on this issue.

We only had to wait two months for this, as the Hungarian Official Gazette of 28 February 2023 already includes the Government Decree 62/2023 (28.II) ("Amending Decree no. 3") practically amending Amending Decree 2. the provisions of which are effective from 1 March 2023.

With regard to the provisions concerning pharmaceutical manufacturers, the following provision has entered into force in place of Section 4/A(2) of Government Decree No. 197/2022:

„For the purposes of this §, a pharmaceutical manufacturer is a manufacturer carrying out the activities under class TEÁOR 2110 (Manufacture of basic pharmaceutical products) and class TEÁOR 2120 (Manufacture of pharmaceutical preparations), provided that its aggregate net turnover from activities under classes TEÁOR 2110 and TEÁOR 2120 exceeds 33.33 per cent of its total net turnover on the basis of the latest annual accounts available on the first day of the tax year."

The legislator has therefore clarified the scope of the pharmaceutical manufacturers subject to the special tax to the extent that those engaged in activities under TEÁOR 2110 (Manufacture of basic pharmaceutical products) and TEÁOR 2120 (Manufacture of pharmaceutical preparations) are subject to the extra profit tax, only if their aggregate net turnover from activities specifically included in classes 2110 and 2120 of NACE (i.e. assuming activities actually carried out and taking into account only and exclusively the aggregate net turnover from these activities) exceeds 33,33 % of their total net turnover, based on the latest annual accounts available on the first day of the tax year.

The new Amending Decree no. 3 also clarifies that the above Article 4/A(2) applies for the first time to the tax year 2022, which means that the tax base for the tax that may be payable for 2022 must be determined on the basis of the latest annual account on 1 January 2022. This practically meaning that for determining the tax base the total net turnover resulted in the 2021 annual report shall be taken into account.

The extra profit tax payable for 2022 and 2023 tax years is a progressive flat-rate tax, as per the following tax rates:

The deadline for the assessment, declaration and payment of the extra profit tax for the 2022 tax year is the 20th day of the fifth month following the tax year (i.e. 20 May 2023 for taxpayers with a normal tax year).

For the 2023 tax year, the deadline for the declaration and payment of the advance is the 20th day of the eleventh month of the tax year (i.e. 20 November 2023 for standard taxpayers). The deadline for filing the return and paying any unpaid extra profit tax is also the 20th day of the fifth month following the tax year (i.e. 20 May 2024 for standard taxpayers).

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