This article is the third installment in our seven-part series on Hungary’s corporate taxation framework. Following the overview of general corporate tax rules in Part 1 and the discussion of special tax regimes in Part 2, this article focuses on the extra profit taxes introduced in Hungary in recent years.
The upcoming parts of the series will cover topics such as cross-border taxation, anti-avoidance measures, investment in corporate assets, and sanctions imposed for non-compliance.
Extra Profit Taxes in Hungary: Sectors and Rates
In 2022, the Hungarian government introduced sector-specific extra profit taxes targeting businesses that gained windfall profits due to external economic circumstances such as the energy crisis and inflation. These taxes apply to a broad range of industries.
1. Financial Service Providers
The tax base is calculated based on the adjusted pre-tax profit of financial institutions:
– 13% on the portion of the tax base up to HUF 20 billion,
– 30% on the amount exceeding that threshold.
2. Banking Sector
Banks are required to pay a transaction tax (a form of withholding tax) on all money transfers from Hungarian payment accounts to other domestic or international bank accounts.
3. Insurance Companies
Insurance providers are subject to an additional insurance tax based on the amount of insurance premiums collected:
– The tax rate ranges from 1% to 7%, depending on the type of service and the total amount of premiums.
4. Oil Product Manufacturers
Manufacturers of oil products may face an extraordinarily high extra profit tax of up to 95%, depending on the difference between the world market price and the acquisition cost.
5. Robin Hood Tax
A 41% special tax applies to electricity producers using renewable energy sources or waste-based production methods.
6. Pharmaceutical Manufacturers and Distributors
A progressive tax structure applies to pharmaceutical companies:
– 0.5% on revenue up to HUF 50 billion,
– 1.5% between HUF 50–150 billion,
– 4% on amounts exceeding HUF 150 billion.
7. Retail Sector
A retail tax of 4.5% is levied on the portion of revenue exceeding HUF 100 billion.
8. Telecommunications and Airlines
Telecommunications providers are taxed based on their net sales from electronic communications services, while airlines are subject to special sectoral taxes as well.
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This article provides general information and does not constitute legal advice. If you would like to know how extra profit taxes may affect your company in Hungary, feel free to contact our firm.
Contact
Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
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Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57