tax/VAT

Breaking: Fuel tax to be increased in Hungary

MOL fuel station Hungary oil

A steep excise tax hike is expected to come next year. What does this mean, how much more expensive will fuel get because of this? One thing is sure though: motorists are certainly not going to be happy.

Excise duties on fuel and energy will increase according to the government’s tax plan for next year. The reasoning is that this is necessary because it would risk EU infringement proceedings if the prices of these two fundamentals were set lower than EU levels, hvg.hu reports.

The government applied for a derogation to increase excise duty in December last year, but the European Commission appears not to have accepted it.

According to hvg.hu, the draft tax package includes the following rates:

  • The excise duty on petrol will rise from HUF 120 (EUR 0.33) per litre to HUF 152.55 (EUR 0.41) if the world price of oil is more than USD 50 per barrel. If the world oil price remains below USD 50 per barrel, the excise duty will increase from HUF 125 (EUR 0.34) to HUF 157.55 (EUR 0.43).
  • The excise duty on kerosene could rise from HUF 124.2 (EUR 0.34) to HUF 152.55 (EUR 0.41) above the world oil price of USD 50 per barrel, and from HUF 129.2 (EUR 0.35) to HUF 157.55 (EUR 0.43) below USD 50.
  • The tax on diesel will rise from HUF 110.35 (EUR 0.30) to HUF 142.9 (EUR 0.39) per litre above the world oil price of USD 50, and from HUF 120.35 (EUR 0.33) to HUF 152.9 (EUR 0.42) below USD 50.

The excise duties on several other energy products were already raised in last year’s government decree on special taxes. However, then they were called excess profit taxes. Now the tax rate of that time will remain, only now it will be written into law. Thus, it will not be “excess profit tax” after this, but the normal tax rate, hvg.hu explains.

How expensive will this make fuel for us?

If the excise tax on fuels is indeed raised to the extent proposed in the 2024 tax package submitted on Tuesday, then

fuel prices in Hungary will increase by an average of HUF 40-41 on 1 January,

Ottó Grád, secretary general of the Hungarian Mineral Oil Association, told Pénzcentrum. Although the excise duty itself will rise by only HUF 32, 27 percent VAT will also be added, which will mean an extra HUF 8.8.

Drug tax increased, medicines to disappear from Hungarian pharmacies

Drugs and medicines

The Orbán cabinet issued a decree on Wednesday, 31 May, which changed the rules on extra taxation of pharmaceutical companies. This new regulation is a clear threat to pharmaceutical manufacturers, which could result in serious medicine shortages.

The government has promulgated a decree changing the rules on extra taxation of pharmaceutical companies. According to this, from 1 July, manufacturers and distributors will have to pay an extra tax of 20 percent on subsidised medicines with a producer price of less than HUF 10,000 (EUR 27), and 40 percent on medicines with a higher price, instead of the 28 percent previously paid, Népszava reports.

According to the news portal, the consequences of the move are not yet being discussed by international manufacturers. They are presumably waiting for the headquarters to decide whether they will continue to sell the products concerned on the Hungarian market under these conditions or whether they will withdraw them. If the latter is the case, it could affect patient care on several fronts.

There are already intermittent shortages of modern medicines, such as insulin, anticoagulants and cancer nutrients. The extra tax could significantly expand this list and include life-saving products such as the adrenaline auto-injector, which costs a few tens of thousands of forints and is used for severe allergic attacks, Népszava writes.

They add that it is not only cutting-edge drugs that may disappear from pharmacies, but also generic (post-manufactured) medicines. These now include biological drugs, such as therapies for arthritis and various haematological diseases. In total, there are about 500 subsidised generic medicines over HUF 10,000 in pharmacies in Hungary. The health insurance provider spends about 20 percent of its medicine budget on this group of medicines.

According to a pharmaceutical market analyst interviewed by the newspaper, this segment is most at risk with the newly introduced 40 percent extra tax, as many of the active agents in this group are only generic, and if they are not worth selling, they will not be available.

Radical decisions taken by the Hungarian government overnight

hungary budapest parliament

Thursday marked the start of a new month, and the Hungarian government celebrated with a number of new regulations. Among many other things, four major government decisions were taken. Here are the details.

A new tax that hurts many

The latest issue of the Hungarian Gazette was published on Wednesday evening around 11 PM. In it, 3+1 important government decrees were published. They affect economic operators, investments, savings, and therefore millions of people.

According to portfolio.hu, the government’s unstated aim with the new regulations is to channel the public and the financial sector into government bond investments through a variety of instruments.

The government decree on the different applications of Act LII of 2018 on the social contribution tax during an emergency states that the government will introduce a 13 percent social contribution (szocho) on top of the existing 15 percent interest tax on savings.

It is payable on the capital gains on the interest accrued after 1 July and on the capital gains on newly purchased securities.

Although it was previously announced as temporary and opposed by the European Commission, the Hungarian government will keep the extra profit tax in 2024.

Government bonds strengthen, letter to banks

The government is limiting the vast majority of investments in some investment funds to government securities. This radically interferes with the investment rules of some institutional investors.

The government has also required banks to broadcast negative advertising to their own customers, thereby discrediting the bank’s own products and services. The new government regulation states that financial awareness must be developed in Hungary. To this end, financial institutions will be required to send letters showing how much their customers would have gained if they had put their money in government securities as opposed to bank deposits.

Hungarian government to remove special taxes in 2024

The government is planning to remove the “extra tax burdens” on the banking sector, the finance minister told an annual meeting of the Hungarian Banking Association on Friday.

Mihály Varga praised Hungary’s banks as “performing well in a worsening international environment”. The economy could not operate without a suitable banking sector, while banks could not be profitable without a well-performing economy, either, he added. Hungary’s high employment rate indicates that the economy could stand the test of war times, he said, adding that the goal was to maintain the economy’s activity in future.

Concerning banking, he said that the sector’s capital adequacy ratio was twice as high as the required minimum, while the loan/deposit ratio was also better than the European Union average.

The government has considered the windfall profit tax as a temporary measure and will remove it as earlier pledged. He added, however, that “full consolidation” of the economy still required bank financing. He also asked banks for their partnership in working out a solution for phasing out the special taxes.

Varga said the government expected a “higher growth” next year, with average inflation of 6 percent and deficit below 3 percent.

Referring to Ukraine’s blacklisting Hungary’s OTP Bank as a supporter of Russia, Varga said the government was standing by Hungary’s banks, adding that OTP had not violated any international rules and had “clearly refuted Ukraine’s false arguments”. “We will do everything to make Ukraine withdraw its groundless and unacceptable measure,” he said.

Banking Association head Radovan Jelasity said the sector was stable, but added that banking taxes were “disproportionately high”. “These burdens hinder operations and force the sector to take non-market reactions”. The sector needs more market, higher predictability, and an early removal of the extra taxes, he said. The association expects minimum growth this year and is working to avoid recession; the extra taxes are posing an “increasing problem” because clients will leave and seek foreign banks, he added.

The government can continue relying on Hungary’s banks; they will continue working “to benefit the Hungarian economy”, Jelasity said.

Mayor: the government took too much money from Budapest

Budapest mayor Gergely Karácsony

The central government has stripped the Budapest municipality of funds amounting to 227 billion forints (EUR 601m) in the past three years, Mayor Gergely Karácsony said on Facebook on Friday.

According to Karácsony’s calculations, the city had been made to pay a new solidarity tax introduced in 2019, which amounted to 136 billion forints, while it collected 81 billion forints less in the local business tax, as a result of government-initiated changes to the system.

Karácsony spoke in reaction to recent remarks made by Gergely Gulyás, the head of the Prime Minister’s Office, who had said that the city had “inherited over 214 billion forints from former Mayor István Tarlós”. He insisted that the extra burdens the government had levied on the city “far exceed the amount the government is harping on”.

Socialists to turn to top court over dismissal of teachers

The opposition Socialist Party is turning to the Constitutional Court over the dismissal of teachers who took part in civil disobedience, the party’s co-leader said on Friday. Because a constitutional review requires supporting signatures from 50 lawmakers, the Socialist Party’s parliamentary group leader will on Friday send a letter to the other opposition groups, requesting their support, Agnes Kunhalmi told an online press conference. The Socialists side with teachers and with those “whose rights are infringed by the government”, Kunhalmi said, calling on the government to withdraw a draft legislation that would change the status of teachers.

She argued that the model contained in the proposal was “anti-teacher, anti-student and anti-education”. This draft legislation would “definitively dismantle Hungarian schools”, she said, arguing that it went against every aspect of Hungary’s agreement with the European Union. She said the agreement stipulated that the government and parliament cannot unilaterally introduce measures that increase teachers’ workload, restrict existing professional competencies or make the teaching profession less attractive.

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Hungarian mystery: an ammunition production line vanished in thin air

Ammunition production line Hungary

We have recently come across a rather odd mystery in Hungary. In a year, 75 million cartridges may be produced on the production line, but it is not known where they are delivered. The company demands compensation now. How’s it going to proceed? 

Mysterious factory

Csaba Papp, the managing director of Borsodi General Engineering Plant Ltd (BS-GÉP) shared details with 24.hu regarding the complicated case. “The GRU agent Russians, who have been forced out of the country by the intelligence services, may sue me in Budapest for revealing where a NATO-compatible ammunition production line is, which I imported from Turkey, also a NATO member, while some NER acrobat has been profiting from it for years,” Papp said.

In one shift, 25 million rounds of 7.62 x 39 millimetre Kalashnikov ammunition are produced by the production line that vanished. Not only its manager, but also the competent authorities do not know where they can be located. Since a bullet costs about USD 2, up to 75 million rounds could come off the line in three shifts. So in one year, USD 150 million, or HUF 52 billion in revenue, has disappeared.

The series was imported from Turkey by BS-GÉP. It was intended for the gunpowder and ammunition factory in Balatonfűzfő, but it did not end up there.

The case of the phantom factory and the bullet production line even turned into a lawsuit. The proceedings brought by Csaba Papp on suspicion of budgetary fraud have been closed. The court found no budgetary damage or other debts to the state. For this reason, Papp would like to claim the benefit, as he has not received it so far.

The lost profit could be as much as HUF 200 billion (EUR 539,059,747.80), as the line disappeared in 2018. The story of the missing ammunition production machine is mysterious and fascinating anyway, but the situation is exacerbated by the fact that there is an ammunition shortage all over Europe due to the Russian-Ukrainian war.

Not long ago, a shipment of one million rounds of ammunition has been arranged in Brussels to help Ukraine. There is currently no operating, domestically owned ammunition factory in Hungary, but there are plans. In Várpalota, a giant 70 billion euro project has recently been launched.

What is behind this odd case?

The Mil-Exim ammunition factory has been in operation since 2015. The project was to be funded by a mix of EU, private and public entities.

When an attempt was made to assassinate Ukrainian President Volodymyr Zelensky’s chief adviser, the first reports in Ukraine cited that Hungarian-made bullets were fired at his car.

The alleged, approximate location of the production line is said to be somewhere in the NAV customs warehouse, where it was transferred in 2018. Papp filed a complaint against the head of the company for abuse of office and embezzlement.

Military equipment cannot be removed from the NAV warehouse without the permission of the capital’s government office. Papp repeatedly asked in vain for information on who had received the permit.

What is known is that it was taken from the warehouse, but there is no official information on who got his hands on it and where it was delivered, hence, compensation cannot be carried out.

PHOTOS: Budapest Airport alerted – suspicious parcel from the USA

Budapest Airport alerted (2)

National Tax and Customs Administration of Hungary (NTCA) officials found a valuable coin in a parcel, coming from the United States.

According to their press release, the shipment was labelled as low value. But, during the checkout, NTCA officers realised it was too heavy. After opening its package, they found a gold coin weighing 41 grammes. Thus, they asked the Ministry of Construction and Transport’s art supervision department. In the answer, the department cleared that the face value of the coin is ten rubbles and depicts Russian tsarina Catherine the Great. Made of pure gold, the coin’s real value is around HUF 3 million (EUR 8,000). As a result, the officials of NTCA reported the case to the police as budget fraud, nav.hu wrote

Government may abolish crucial tax soon

Fidesz

The government will introduce legislation to ensure that farmland is not taxed locally, the minister of agriculture said on Friday.

Some 120,000 signatories, including the minister, have joined a petition against a land tax introduced in Hódmezővásárhely, southern Hungary, launched by farmer associations. “If the dollar-left introduces land tax in a town, then it will be ready to introduce it in any other left-wing town, threatening the interests of Hungarians farmers and the Hungarian farm sector,” István Nagy said in a statement.

He said the coronavirus pandemic, a massive draught and damaging Brussels sanctions had placed huge burdens on farmers. The government is on the side of Hungarian farmers when it comes to taxes on land, and opposes all such local taxes, he added.

Is the Hungarian government ready to scrap excess profit taxes?

ryanair

In March, the Hungarian government will start preparing next year’s budget. The new budget could also remove the controversial excess profit taxes.

The Hungarian government may potentially scrap the controversial excess profit taxes in next year’s budget, Minister of Finance Mihály Varga told Index.hu. The measure hit airlines, telecommunication companies as well as the banking and energy sectors.

In the following weeks, the Hungarian government ought to start preparing next year’s budget. The new economic policies would not differ significantly from that of this year. Next year’s budget should also focus on energy protection, but in addition to the energy bill, an important part is going to be the upkeep of the maintenance of family allowances and defence expenditures.

food store spar price inflation in hungary
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“I am afraid that, given the Russian-Ukrainian war and the failed sanctions imposed by Brussels, the focus of next year’s budget will have to be on protecting the energy supply” – said Minister of Finances Mihály Varga to index.hu.

“Let’s not forget that we are also progressively phasing out the excess profit taxes, as we promised that it will only remain in its current form for two years.”

“We will certainly reduce the tax burden on the banking system and the pharmaceutical industry” – promised Mihály Varga. “In some cases, we talk about a quick prospect of phasing out, in other cases the process will be more graduate.”

The finance minister’s statements on the tax burden on the pharmaceutical industry represent a sharp change from the government decree issued just over 3 months ago.

Back then the decree introduced a special levy on pharmaceutical manufacturers on the basis of the annual accounts. The decree entered into force on 24 December.

Windfall taxes were announced back in May 2022 by Prime Minister Viktor Orbán. The measures were most notably publicly criticised by Rynair CEO Michael O’Leary. He held a press conference at short notice in Budapest last September.

“The Hungarian Govt’s idiotic ‘excess profits’ tax on the loss-making air transport sector (and Hungarian citizens/visitors) has done nothing but damage Hungarian tourism, connectivity, traffic, and jobs as evidenced by these severe cuts to our Budapest winter schedule, which were made in direct response to this ridiculous “excess profits” tax” – said O’Leary to selected media, including Daily News Hungary.

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The United States unilaterally terminated crucial treaty with Hungary

USA Joe Biden treaty

Many Hungarians will find themselves in serious trouble due to a historic decision of the United States.

The US decision will affect individuals and companies since America cancelled the double taxation treaty unilaterally, Világazdaság wrote. The Hungarian economic newspaper said that investments would be delayed because of Washington’s decision in the longer term. Furthermore, it creates uncertainty, according to Károly Radnai, chairman of the taxation committee of the American Chambers of Commerce in Central and Eastern Europe (Amcham).

The treaty will be valid until 31 December 2023. Mr Radnai said that the Hungarian veto against the US global minimum tax was among the reasons for Washington’s decision. Furthermore, the old treaty became outdated. Amcham does not have any information about ongoing official talks concerning the issue. Hungary’s finance ministry did not provide an answer for Világgazdaság concerning the termination of the treaty. Amcham believes that a new treaty is in the interest of both sides.

However, hammering out a new agreement and accepting it would take at least years based on international experience. Therefore, we should prepare for years without a treaty excluding double taxation.

Qatar’s newly appointed PM holds first meeting with Hungarian foreign minister in Doha

Mohammed bin Abdulrahman Al Thani, Qatar’s newly appointed prime minister, held his first meeting after taking his oath of office with Foreign Minister Péter Szijjártó in Doha on Tuesday. Szijjártó said on Facebook that he had set out to the conference centre in Doha “to meet my good friend Foreign Minister Mohammed Al Thani, but by the time I arrived, I was met by Prime Minister Mohammed Al Thani, as his first guest, around five minutes after he took his oath.”

From now on, Qatari-Hungarian cooperation will have a supporter at the highest level, Szijjártó said. “We now have even better prospects for obtaining LNG gas from Qatar,” he said, adding that this would contribute to Hungary’s energy security in the foreseeable future. The minister also congratulated Qatar on its success in hosting the 2022 World Cup.

qatar szijjártó
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The United States and Hungary terminate double taxation treaty, relations worsen

stock-exchange-new york

The United States has terminated the double taxation treaty between it and Hungary. Its provisions are still in force for this year. Next year, however, companies and individuals with US interests face big changes, mostly negative ones.

The US is terminating the agreement

Last July, the United States notified Hungary that it was terminating the double taxation treaty between the two countries, Index reports. The provisions of the expired agreement can still be applied for tax purposes until 31 December 2023. This means that there will be no change in the tax treatment of income earned until the end of this year, the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, NAV) said on its website.

For a long time, Index writes, it was uncertain how definitive the denunciation of the agreement would be. However, based on the NAV’s information and the latest US position, the treaty is now considered to be terminated permanently, said Lajos Bagdi, partner in the tax and legal advisory business of Niveus Consulting Group. The grace period lasts until the end of 2023.

Under the treaty, if a Hungarian investor buys a US stock on a stock exchange and receives a dividend, he orthey will pay 15 percent US withholding tax on the dividend income and will not be subject to any additional Hungarian personal income tax. Thus, double taxation is avoided.

What is the consequence of the termination of the treaty?

However, if the treaty is terminated, Hungarian investors will be subject to a 30 percent withholding tax starting from 2024, and an additional 5 percent Hungarian personal income tax. This will bring the total tax burden to 35 percent.

If the agreement is terminated, interest income will be considered other income, subject to a 13 percent social contribution tax in addition to personal income tax. On top of that, transactions in US stocks and bonds will not be considered controlled capital market transactions, which will make it virtually impossible for Hungarians to invest in the US.

US investors do not have it this hard

Since Hungary does not levy withholding tax on dividends, royalties and interest income paid to foreign companies, this type of income is tax exempt, Lajos Bagdi said. He added that there is nothing to prevent Hungary from imposing withholding tax in the future, thus eliminating the unequal situation.

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Bread, butter, lard cost twice as much, says Hungarian opposition DK

Basic foodstuffs such as bread, butter and lard today cost twice as much as a year ago, a politician of the opposition Democratic Coalition (DK) said on Monday.

While the price of these products have “increased brutally”, several other basic items such as flour and eggs “are often simply missing from shelves”, Zoltán Varga told an online press conference.

He said that because of Hungary’s record high VAT in Europe, the government “is even making gains” on inflation.

Varga said the only solution to stop inflation would be to regain access to European Union funds and restore trust in the Hungarian economy.

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These three food items have doubled in price in Hungary within a year

Inflation

According to the latest data from the Hungarian Central Statistical Office (KSH), food prices in Hungary continued to rise in January. The database also shows that the prices of three important staples – bread, butter and lard– have doubled in a single year.

Hungary has the highest VAT rate in the EU with 27 percent. According to an expert interviewed by the Hungarian television channel RTL, this will make life even harder for citizens with low incomes.

Challenging times ahead

According to the latest figures, the price of bread in January this year was 111 percent higher than at the same time last year. This means that the average price of white bread has almost reached HUF 1,000 (EUR 2.58) per kilogramme. Butter and lard prices have also risen at a similarly high rate. The price of these food items has also doubled since January last year.

Macro analyst József Hornyák, interviewed by RTL, points out that if one compares the figures for January with those for the previous month, the sharp rise in the price of almost all foodstuffs is still clearly visible. He says that the lowest-income earners are the most affected by the sharp jump in food prices. They are the ones who spend most of their income on food. He calculates that the lowest income group spends roughly twice as much on food as the higher income group.

High VAT rate

According to Hornyák, the high VAT rate is a major contributor to the plight of the poor. As he says,

the high VAT rate also contributes to the high price level of products, which places the greatest burden on the lowest-income earners.

However, the government does not want to change the VAT rate. They argue that if it was lowered, retailers would not pass on the positive effects of this reduction to consumers anyway. Secondly, according to the Minister of the Prime Minister’s Office Gergely Gulyás, the well-off class already pays significantly more VAT due to their higher consumption.

According to the RTL report, last year people left billions of forints more VAT in the shops than originally expected in the budget as a result of the increased inflation.

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Will we pay EUR 2.5 more for each plane ticket at Budapest Airport in 2023?

Budapest Airport queue useful

The economic and energy crisis hit Hungary hard, and every sector struggles because of the consequences. The local governments are probably in the worst position since most of them cannot expect considerable government help. Therefore, they must come up with creative solutions to fill the holes in their budget. For instance, the 18th district of Budapest invented a brand new tax, the so-called passenger fee.

According to the early December decision of the local council, all passengers of Budapest Airport would be subject to the new tax. Everybody arriving or departing from Hungary’s biggest international airport would be required to pay HUF 1,000 (EUR 2.5). That would mean billions of forints for the municipal budget only because the airport is officially on the territory of the district.

The local council’s idea is to collect the extra tax from the ground handling companies. Thus, you would not have to turn to the district office or official at the airport. You would only have to pay more for your ticket, and the companies would transfer the extra tax to the district’s local budget. The collected sum would be spent on the renewal of the main roads.

The CEO of Smartwings, Attila Farkas, told Világgazdaság that the Budapest Airport, the airlines, and the ground handling companies would fight collectively to abolish the tax as soon as possible. He added they believed the new tax was illegal, just like the government office of Budapest. Therefore, the office called the district to scrap the relevant decree. Instead, the district’s mayor, Ferenc Szaniszló, started an intensive Social Media campaign to further promote the idea.

The municipal council has 30 days to annul the decree. Provided they do not comply the Supreme Court (Kúria) will decide the matter. Those opposing the idea argue that its implementation would impossible. Furthermore, it would result in double taxation since the government introduced the departure tax before, and the taxpayer is theoretically the same.

Interestingly, the district’s 2023 budget does not calculate the new tax as a possible source of income. That probably means they do not regard it as realistic.

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New excess profit tax to come in Hungary

basic income hungary finance

The Hungarian government has amended the Excess Profits Tax Decree to introduce a special tax on pharmaceutical manufacturers in proportion to their turnover. This will bring significant extra revenue to an otherwise struggling public budget in 2023.

On the last working day before 24 December, a total of 420 pages of new legislation or amendments to legislation were published in two different issues of the Hungarian Gazette. One of the most interesting of these is a government decision to supplement the excess profits tax decree published in the summer with a new type of special tax, Portfolio reports.

The essence of this government decision is that the pharmaceutical manufacturer is obliged to assess, declare and pay the special tax for the tax years 2022 and 2023 as provided for in this paragraph.

The tax rate under this section shall be…

  • 1 percent on the part of the net turnover determined on the basis of the annual accounts for the tax year not exceeding HUF 50 billion
  • 3 percent on the part of the net turnover determined on the basis of the annual accounts for the tax year exceeding HUF 50 billion but not exceeding HUF 150 billion,
  • 8 percent on the part of the net turnover determined on the basis of the annual accounts for the tax year exceeding HUF 150 billion.

The decree, signed by Viktor Orbán, entered into force on 24 December.

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Hungary a tax haven?

tax deductions

Now that Hungary has been exempted from applying the global minimum tax, the country will remain a tax haven, the opposition LMP party said on Friday.

“It is rather unpleasant to live in a tax haven, because only a thin layer of society, the ruling class is getting richer, while ordinary people remain poor,” LMP spokeswoman Anna Suveg told a press conference. She welcomed the recent agreement that granted Hungary access to the EU recovery funds but added that the country was still a loser of the deal. The only winners of the artificially generated race to cut taxes are the multinational corporations, Suveg said. LMP would therefore introduce a dual-rate system of corporate taxation, with large companies obliged to pay a 25 percent tax on profits above 500 million forints (EUR 1.23m), she said.

Michael O'Leary ryanair
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Land taxation is against the Hungarian Constitution, agriculture ministry says

land agriculture farm export

The Ministry of Agriculture rejects the introduction of a land tax in Hódmezővásárhely, in southern Hungary, a state secretary of the ministry said on Wednesday.

Sándor Farkas called introducing the tax, at the initiative of the city’s mayor, Péter Márki-Zay, an “irresponsible” move and said his ministry would take legal steps to prevent “such burdens” from being imposed in future. Farkas insisted that it was an “eighty-year-old leftist tradition to discriminate and look down on farmers” and suggested that similar attitudes were typical of mayors with leftist leanings.

The state secretary noted the “historic draughts” that had hit Hungary in summer, and said that soaring energy, fertiliser and seed prices had created a difficult economic situation. Imposing a land tax would result in higher producer prices further increasing inflation, he said.

Farkas also said double taxation was prohibited under Hungarian and community law, and as long as farmers were paying the local government for ranger services, further taxes on their land could not be imposed. He added that the Constitutional Court had earlier ruled against such initiatives.

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Ryanair refuses to pay the Hungarian government’s fine after calling departure tax idiotic

Michael O'Leary ryanair

As we reported before, the Irish low-cost airline Ryanair called on the Hungarian government in November to apologise to its citizens and visitors for its failed attempt to impose an ‘excess profits’ tax on airlines. According to Michael O’Leary, Ryanair could not even pay that tax due to being a loss-making airline. In June, the Hungarian government imposed a HUF 300 million (EUR 730,000) fine on the airline after stating that they will have to pass the ‘excess profits’ tax on to the passengers.

The Hungarian government proposed in November to replace the ‘excess’ profits tax (departure tax) with an ‘environmental’ passenger tax. Ryanair then said that any such tax makes air access to/from Hungary more expensive and uncompetitive, compared to flights to/from neighbouring countries (Romania, Serbia, Slovakia, Croatia, and Austria).

The airline was fined in June

The airline has still not paid the HUF 300 million fine for passing on the extra profit tax. The Group CEO of Ryanair kept referring to losses. Meanwhile, the company posted record revenues of EUR 1.4 billion in the first half of the financial year, according to Mandiner. The reason is that an administrative lawsuit is still pending against the airline, in which the company has requested a stay of execution and thus a delay in the payment of the fine. The Metropolitan Court rejected the stay of execution, a decision against which the company appealed, but the appeal is still pending.

The ‘extra profits’ tax imposed by the Hungarian government was strongly criticised by the company’s CEO Michael O’Leary. He repeatedly criticised the Minister of Economic Development, Márton Nagy, calling the tax stupid and calling on the government to repeal it.

Ryanair will not give in

The Government Office’s investigation, which closed in August, found that Ryanair had deceived consumers through unfair commercial practices, for which it fined the company HUF 300 million. The company’s CEO announced flight cancellations and the closure of some routes in the autumn, citing the tax imposed on them. They also announced that they would appeal against the decision of the government office.

Michael O’Leary attacked the tax mainly because of their losses after the airlines suffered huge losses due to the COVID-19 pandemic. In November, it was revealed that the airline had made a record profit of EUR 1.4 billion for the first half of the financial year. In that period, Ryanair carried 95.1 million passengers and its revenues tripled to EUR 6.6 billion.

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