An insurance tax bill has been adopted by Parliament and will come into force from 1 January 2013, subject to it being signed by the Hungarian president.
The main features of the new tax will be the following:
- It will be levied on insurance fees from comprehensive insurance, as well as most non-life insurances. Agricultural insurance, mandatory third-party liability insurance and sickness-insurance will not be covered
- The rate will be 15% on comprehensive insurance and 10% on the rest
- The tax will be payable by insurance companies but may be recharged to policyholders
- The tax will apply to risks arising in Hungary and will also be payable by insurers operating on a freedom-of-services basis. According to Hungarian case law, no relief from double taxation will be available, as the tax is unlikely to be regarded as a tax on capital or on income
- The 30% insurance tax on mandatory third-party liability insurance will remain unaffected. However, the special tax on insurance companies as well as the fire protection surcharge will be repealed.
Insurers, including those offering their services in Hungary without a physical presence, should review their pricing policies in the light of this new tax.