This article is the third one in a seven-part series of articles covering the important rules of corporate taxation in Hungary. After covering the Basic Framework and Special Regimes of Corporate Tax in Hungary we provide you a summary regarding Extra Profit Tax. The series will cover later on issues such cross-border treatment, anti-avoidance, investment in corporate assets, and penalties for non-compliance.

An Extra profit tax has been introduced for:

1. Financial service providers

The tax base must be determined on the basis of adjusted pre-tax profit of financial service providers in FS.

The rate of the special tax: 13 percent tax on the part of the tax base not exceeding HUF 20 billion, and 30 percent tax on the part above that.

Similar extra profit tax is implored on

2. banking sector

After every bank transaction in which money is transferred from a Hungarian payment account to another Hungarian or foreign bank account transaction fees are charged by the bank as a withholding tax payable by the banks to the fiscus.

3. insurance enterprises

Insurers have to pay an insurance supplementary tax. The tax is based on the amount of the insurance premiums from the various insurance services. The tax rates vary from 1-7% depending on the tax base and the activity.

4. petroleum product producers

A very high extra profit tax (running up to 95 percent) is imposed on petroleum product producers.

5. Robin Hood tax

The special tax of 41% is imposed on producers of electricity from renewable energy sources or waste.

6. Pharmaceutical manufacturers, pharmaceutical distributors

The special taxes levied on pharmaceutical manufacturers are the tax base

– 0.5 percent for a part not exceeding HUF 50 billion,

- 1.5 percent for its part exceeding HUF 50 billion but not exceeding HUF 150 billion,

- 4 percent will be charged for the portion exceeding HUF 150 billion.

7. Retail trade

Extra retail tax rate is 4.5 percent for the part of the tax base exceeding HUF 100 billion.

8. Telecommunications sector, airlines

The telecommunications extra tax is levied on businesses providing electronic communications services, calculated on the basis of net sales revenue, and the airline companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.