Extra profit taxes levied on the energy sector

1. The income tax of energy suppliers (the ’Robin Hood tax’)

For the 2022 and 2023 tax years, the scope of taxpayers of the Robin Hood tax has been extended to include manufacturing industry producers (this category includes bioethanol producers, starch and starch products producers and sunflower oil producers).

Tax base: same as set out in Hungarian Act LXVII of 2008 (i.e. adjusted profit before tax).

Tax rate: same as set out in Hungarian Act LXVII of 2008 (31%).

Assessment and payment deadline:

• the tax advance for the 2022 tax year must be declared by 20 September 2022 and paid in equal monthly instalments from that date until the 20th of each month;
• The tax advance for the 2023 tax year must be declared by 20 January 2023 and paid in equal monthly instalments by the 20th day of each month.

Manufacturing industry producers whose financial year is different from the calendar year should assess the tax for the first time for their full tax year starting after 31 December 2021 and including 1 July 2022.

2. Special tax on petroleum product producers

The petroleum product producers are liable to pay the special tax for the tax years 2022 and 2023.

Tax base: world market price difference of crude oil originating from the Russian Federation (calculated as laid down by the Decree) multiplied by the quantity of crude oil originating from the Russian Federation purchased in the month in question (measured in barrels).

Tax rate: 25%.

Assessment and payment deadline: monthly, by the 20th day of the month following the assessment month. The special tax for each month of the period between 1 January 2022 and 1 July 2022 should be assessed, declared and paid by 20 September 2022.

3. Special tax on electricity producers

The special tax on electricity producers should be paid for the tax years 2022 and 2023.

Liable taxpayers: with the exception of the power plants with an installed capacity of less than 0.5 MW:

1. the producers eligible for the compulsory purchase as set out by Government Decree No. 389/2007 (XII. 23.) (hereinafter: the “KÁT Decree");
2. the producers eligible for the compulsory purchase as set out by Government Decree No. 299/2017 (X. 17.) (hereinafter: the “METÁR Decree”);
3. the producers eligible for green premium support under the METÁR Decree,

provided that: they terminate their contracts for the use of aid under the KÁT Decree in the tax year 2022 or 2023, or if they commence their commercial operation in the tax year 2022 or 2023 but do not conclude contracts for the use of aid under the KÁT Decree.

Tax base: the positive difference between the revenue from the electricity sales after the amount of electricity fed into the grid in the assessment month and the product of this amount and the applicable feed-in or support price for the relevant tax year. In the case of eligible generators: the positive amount of the sales price fixed in the electricity trading contract concluded by the generator minus the subsidised price applicable for the relevant tax year multiplied by the amount of electricity fed into the grid by the generator during the assessment month.

Tax rate: 65%.

Assessment and payment deadline: monthly, by the 20th day of the month following the assessment month. The special tax for each month of the period between 1 January 2022 and 1 July 2022 should be assessed, declared and paid by 20 September 2022.

4. Mining contribution

With the effect from 1 August 2022, the mining fee will increase. A new condition is that the mining operator must extract in 2022 and 2023 at least the same amount of hydrocarbons as in 2021. Mining operators who fail to comply with this condition will be subject to a penalty by the Mining Inspectorate equal to the amount of the mining fee calculated on the basis of the amount of hydrocarbons not extracted.

The rules on the unit value of mineral raw materials and geothermal energy and the method of calculating the value have also changed.

9 June, 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.