The windfall tax is to remain in effect
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The windfall tax is to remain in effect
The legislative process also continued on the last day of May, as Government Decree 206/2023 (V. 31.) - among others - was published, based on which we cannot say goodbye to windfall tax at the end of this year just yet. The government decree originally imposed an additional tax burden on taxpayers in the sectors concerned for the tax years of 2022 and 2023, but the newly published decree extends it also to 2024. Below is a brief summary of next year’s rules.
The rules on windfall tax concerning credit institutions and financial enterprises will be more favourable next year, so the unexpected tax burden will at least be lower than this year. This is partly due to an increase in the threshold of the lower taxable portion of the tax base, taxed at 13%, from HUF 10 billion to HUF 20 billion. The government decree also introduces a tax deduction for the increase in the value of a certain type of Hungarian government bond held by a credit institution or financial enterprise. The amount of the deduction will be 10% of the increase in holdings, up to a maximum of 50% of the windfall tax calculated without taking the reduction into account.
For certain sectors, the rules will remain unchanged in 2024. This is the case for the windfall tax payable by MOL as a producer of petroleum products, by producers eligible for green premium type subsidies under the so-called METÁR regulation, by the balancing regulatory operator in the electricity sector, and by manufacturers in the processing industry. The windfall tax on telecom companies will also be set at the same level as in 2023, and insurance companies will have to determine their windfall tax liability in line with the rules of this year, as well.
Although pharmaceutical manufacturers can breathe a sigh of relief as tax rates will be halved, a negative change is that the payments on the sales of subsidised medicines will rise from 28% to 40% for medicines with a producer price above HUF 10,000. With regard to the special retail tax, only companies with net sales over HUF 100 billion will face an increase in the tax burden, as only the tax rate for the highest band will increase by 0.4 percentage points, from 4.1% to 4.5%.
Finally, it should also be noted that some of last year’s tax increases did not need to be extended, as they were not subject to an expiry date in the Government Decree; for example, the increased rates of company car tax or the changes to transaction tax, and the contribution of airlines also remains in effect.
We hope that our newsletter will help you to better understand the new rules. If you have questions in connection with the above, our advisers will be pleased to assist you.
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