Extra profit taxes levied on financial institutions,
investment companies and insurance companies
- Special tax on banks and financial institutions
The banks and financial institutions in the scope of the Hungarian Act CCXXXVII of 2013 on Banks and Financial Institutions (jointly referred to as ’financial organisations’) should be liable to pay a special tax for the full years 2022 and 2023.
Tax base: the net turnover as defined in Hungarian Act C of 1990 on Local Taxes, based on the annual financial statements for the tax year preceding the tax year.
Tax rate: 10% in 2022, 8% in 2023.
Assessment and payment deadline:
- in 2022, in two equal instalments until 10 October and 10 December 2022;
- in 2023, in three equal instalments by 10 June, 10 October and 10 December 2023.
Financial institutions whose financial year is different from the calendar year should assess the special tax for the first time for their full tax year starting after 31 December 2021 and including 1 July 2022.
- Financial transaction tax (’FTT’)
The scope of the FTT taxpayers has been extended to include companies providing payment services, credit and money lending, currency exchange and currency exchange intermediation activities in Hungary in the legal form of cross-border services.
The payment obligation will arise from 1 July 2022, and new taxpayers must register with the Hungarian Tax Authority by 1 September 2022 at the latest. Service providers entering the Hungarian market after that date will have to comply with the obligation to register with the Hungarian Tax Authority by the 1st day of the month following the month in which they become subject to the special tax.
Tax base: the same as set out in Hungarian Act CXVI of 2012 on Financial Transaction Tax (hereinafter: the ’FTT Act’) (the amount debited on the bank account, the amount of cash payments, fees and commissions, transactions carried out during the tax year using a cash substitute (credit card), etc.).
Tax rate: the same as set out in the FTT Act (0.3%), but the upper limit for the FTT payable should be HUF 10,000 per payment transaction (instead of HUF 6,000). For bank card transactions, the annual FTT lump sum amount due should remain the same as for domestic service providers: HUF 500 per card (for cards with contactless functionality) and HUF 800 (for non-contactless cards).
Assessment and payment deadline:
- monthly, by the 20th day of the month following the settlement date.
- Transaction tax of investment firms and commodity exchange operators
The investment companies in the scope of Hungarian Act CXXXVIII of 2007 on Investment Companies and Commodity Exchange Operators and the Rules Governing their Permitted Activities and credit institutions in the scope of Hungarian Act CCXXXVII of 2013 on Banks and Financial Institutions should be liable to pay a transaction fee on the client-account or own-account purchase of financial instruments (transferable securities, money market instruments, mutual funds) whose ISIN code has been issued by KELER Central Depository.
Tax base: the purchase price of the financial instrument credited to the client account or own account.
Tax rate: 0.3%, capped at HUF 10,000 per purchase.
Assessment and payment deadline:
- monthly, by the 20th day of the month following the settlement date.
The first payment of transaction tax is due by 20 September 2022.
The purchase of a financial instrument issued by the Hungarian State Treasury or by the institution operating the Postal Clearing Centre is exempt from the transaction tax.
- Insurance surtax
Insurance companies in the scope of Hungarian Act LXXXVIII on Insurance Business are liable to pay the insurance surtax for the period from 1 July 2022 to 31 December 2023.
Surtax base:
- the premiums of comprehensive insurance, property insurance and accident insurance, compulsory motor vehicle liability insurance and
- the premiums for services in the life insurance classes.
Surtax rate: banded, depending on the insurance sector.
Assessment and payment deadline:
- annual returns are due by 31 January 2023 and 31 January 2024;
- advance payments are due on 30 November 2022 and 31 May 2023.
If certain conditions are met, special tax base determination rules should apply to the taxpayers having related company status.
June 9, 2022.
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Should you have any questions regarding this newsletter, the tax experts of VGD Hungary will be pleased to assist you.
This newsletter provides general information and does not constitute tax advice.
