Disclaimer: This article was accurate at the time of publishing. To obtain the most up-to-date information, please get in touch with our local experts.
Find out more about IPT.
Hungary has passed on 9th July 2012 a law to introduce full Insurance Premium Tax insurance.
As part of a package of financial measures Hungary will reorganise the tax regime levied on insurance premiums from 1 January 2013.
The planned rates for the new insurance premium tax are:
- 10% for property and accident insurance, plus other classes such as general liability and credit insurance
- 15% for 'comprehensive insurance', includes comprehensive motor, aircraft hull, marine hull and railway rolling stock risks
The proposal to tax compulsory motor third party liability insurance has been dropped.
Life and health insurance will be exempt but policies for supplemental accident insurance relating to life policies are taxable.
The above rates have been further modified by an amendment to the new Act, passed on 19 November. Insurers will be charged different tax rates depending upon their premium income:
- Up to gross premium income of HUF 1 billion - 25% of the applicable tax rate
- Between HUF 1 billion and HUF 8 billion - 50% of the applicable tax rate
- Higher than HUF 8 billion - 100% of the applicable tax rate
The new tax will replace some of the existing Hungarian taxes levied on insurance policies - fire brigade charge and the surcharge on insurance companies. The Hungarian accident tax will not be repealed now following an amendment to the original bill.
All insurers, both resident and non-resident, will be expected to pay the new tax on insurance policies when a risk is located in Hungary. At present, the tax will be levied on the insurer, not the insured as in most other European countries.
Find out more about IPT.