Carbon dioxide quota advance tax payment deadline is approaching!
Government Decree No 320/202 (VII.17) introduced two new payment obligations for operators of facilities receiving free allocation of emission units. The taxes are already applicable to certain taxpayers in 2023, the advance tax for the first three quarters will be due on 16 October!
The taxpayers are operators of facilities receiving significant amount free allocation of emission units whose installation:
- received a free allocation equal to at least 50% of the average of its verified total carbon dioxide emissions in the year preceding the current year and the preceding 3 years, and
- have had verified annual average carbon dioxide emissions of more than 10,000 tonnes over the 3 years preceding the reference year.
Please find below our summary of the most important information about the two new payment obligations:
- Carbon dioxide quota tax
The taxable amount is the amount of emissions in tCO2 as defined in the legislation of the operators of facilities receiving free allocation of emission units.
The tax rate is equivalent to 40 EUR/tCO2 in HUF.
The taxpayers are required to pay a quarterly tax advance, and submit a tax return in this regard.
An annual tax return should by also submitted to the tax authorities until 31 May of the year following the tax year and pay the difference (i.e. the amount which not covered by the advance tax) by the same date. In the annual return, it is also possible to request a refund of the difference in the case of an overpayment generated by the payment of the advance tax.
We kindly note that tax allowances can be applied if the conditions determined in the legislation are met.
Please note that the payment obligation should be applied retroactively for the tax year following 31 December 2022. The related advance tax should therefore be declared and paid by the 15th day of the month following the third quarter (16 October) in relation to the first, second and third quarters of the tax year 2023.
- Transaction fee
From 2023 free allowance sales are subject to a transaction fee, given that a transaction fee will be payable by the operators of facilities receiving significant amount free allocation of emission units.
The fee rate is 10%, calculated on the basis of the EEX-EUA exchange rate on the day of the execution of the transfer of the free quota concerned or on the last exchange trading day prior to the day of the execution of the transfer and the daily average exchange rate set by the Hungarian National Bank.
The operator should report the transaction to the climate change authority within 10 days of the date of the transaction subject to the transaction fee. After that the climate change authority provides a balance statement about the amount of the transaction fee, which should be paid by the operator within 30 days.
In the light of the above, we recommend to check whether your company is a taxpayer and whether special rules can be applicable.
Should you have any questions regarding the above, our tax experts are at your disposal.
28th of September 2023
