Hungary: Proposal for New Taxes

The Hungarian government recently proposed the introduction of new taxes, i.e. financial transaction tax, telecommunications tax and insurance tax. The majority of the proposals are still being debated by the Hungarian Parliament. The telecommunications tax has already been adopted by the Parliament.

Financial Transaction Tax.
Hungary plans to introduce, as from 1 January 2013, a transaction tax on financial transactions completed by payment service providers. The tax shall cover all payment service providers registered in or having a branch in Hungary (with the exception of certain payment services offered by the National Bank of Hungary). Under the proposal, the financial transaction tax would be payable in respect of any transfer, collection, payment made to and from a payment account and any other payment transaction as a result of which the financial service provider debits the account of the payer according to a payment order. However, cash payment to bank account and transactions between two accounts held by the same client and transactions involving securities accounts shall not give rise to financial transaction tax. As a general rule, the payment service provider of the payer shall be liable for the tax. The tax base shall be the amount by which the service provider debits the account of the payer and the tax rate shall amount to 0.1%, capped at HUF 6,000 per payment services.

Telecommunications tax.
The telecommunications tax is in effect as of 1 July 2012 and is levied on landline, mobile calls,  text messages and MMS at a rate of HUF 2 (approx. EUR 0,006) per minute (including incomplete minutes) and per message sent. However, the monthly amount of tax payable may not exceed HUF 400 (approx. EUR 1.3) in 2012 and HUF 700 (approx. EUR 2.31) as of 1 January 2013 per phone number for individuals and HUF 1,400 (approx. EUR 4.6) in 2012 and HUF 2,500 (approx. EUR 8.26) as of 1 January 2013 per phone number for all other users.

The tax is payable by the service provider, who will be required to calculate, declare and pay the tax to the state tax authority before the 20th day of the month following the month in which the call was made. Calls made and messages sent to emergency numbers and charity numbers, as well as test calls, are exempt from tax. The exemption also covers the first 10 minutes (including incomplete minutes) of calls made from an individual’s phone number every month.

Insurance tax.
A universal insurance tax on certain types of insurance (including comprehensive motor insurance, property insurance and accident insurance) shall be introduced as from 1 January 2013. According to the bill, life and sickness insurance shall not be subject to tax, although the act would cover supplemental accident insurance related to life insurance.

The tax shall cover insurance companies registered in Hungary and Hungarian branches of insurance companies registered in any EEA state or any other third country, as well as insurance companies providing cross-border services. The tax base shall be the gross insurance premium under the accounting regulations, whereby the tax rate shall amount to 15% for comprehensive motor insurance and 10% for property and accident insurance services. The tax shall be calculated, declared and paid to the state tax authority monthly by the insurance company before the 20th day of the month following the month in which the insurance premium was charged.

Gábor Kóka
gkoka@deloittece.com

 

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