Energy sector – Surtax on balancing capacity service providers
The energy industry might slowly get used to the practice that the government can establish surtaxes burdening the players of the sector in different ways and to different extents by decrees, during the year and even retroactively.
In addition to the general corporate income tax, electricity producers who have already been subject to a significant sectoral surtax (the so-called Robin Hood tax) should face another significant special tax obligation, this time on their sales revenue from balancing capacity services provided to the transmission system operator (i.e., to MAVIR). Furthermore, since electricity consumers also provide balancing capacity services (meaning a service destined to balance current electricity demand and supply) to MAVIR, the surtax might affect a much wider group.
The amendment to the government decree was announced on 9 November 2022 and the new rules are effective as of 15 November 2022.
Any domestic or foreign person (including the Hungarian branch office of foreign companies) is subject to the new surtax that provides balancing capacity services to MAVIR. The surtax should be applied for the first time regarding the tax year starting after 31 December 2021, as follows:
- The surtax for the period between 1 January 2022 and 30 November 2022 should be established, reported and paid by the service provider, in two equal installments, until 20 December 2022 and 20 February 2023.
- Service providers ceasing to exist or being excluded from the scope of the government decree for other reasons during the tax year of 2022 should fulfill their proportional surtax obligation by 20 December 2022.
- However, after 30 November 2022 (i.e., regarding December 2022 and the following periods), MAVIR will determine and deduct the surtax from the amount of the consideration which it pays for the acquired services, as well as report and pay the tax monthly, until the 20th day of the month following the given month.
- The tax authority will publish the form required for the declaration on its website by 30 November 2022.
- In order to fulfill their new surtax obligation, foreign businesses should first register with the tax authority by 15 December 2022. If the foreign person becomes subject to this tax after 1 December 2022, it should register with the tax authority by the 1st day of the month following the date of becoming a taxable person.
The base of the surtax is the financially realized sales revenue received as consideration for the service. The tax rate is 13% of the tax base in 2022 and 10% of the tax base in 2023.
An amendment to the contribution imposed on airlines – introduced this year with the government decree on extra profit taxes – was also announced on 9 November 2022. However, in this case, the change is not retroactive, but takes effect on 1 January 2023.
According to the new rules, the amount of the contribution will depend not only on the passenger’s final destination, but also on the aircraft’s carbon dioxide emissions. From next year, airlines must monthly report to companies performing ground handling services (i.e. to the entities that are obliged to pay the contribution) the product of the carbon dioxide emission value according to the ACI Airport Carbon and Emissions Reporting Tool and the engine number calculated per passenger seat for all of their affected aircraft operated in the given month.
If the passenger’s final destination is in Europe, the amount of the contribution will be HUF 2,700, or HUF 3,900 or HUF 5,100 per passenger, depending on the emission value per seat, while for passengers flying to countries outside Europe it will either be HUF 6,800, HUF 9,750 or HUF 12,700. Currently, European trips are charged at HUF 3,900/person, while trips outside Europe are charged at HUF 9,750/person.
If the airline operating the aircraft does not fulfill its monthly obligation to provide data, the contribution must be determined at the highest tax rate i.e. at HUF 5,100/person or at HUF 12,700/person, depending on the passenger’s final destination.