The general rules of excise tax and information pertaining to excisable products, tax rates, and tax exemption

Provides a short presentation of the general rules of excise tax, excisable products, the applicable tax rate, and information pertaining to exemption.

Kulcsszavak: National Tax and Customs Administration NTCA excise excisable products guarantee exemption duty-suspension transport EMCS retail wholesale tax return tax refund legal consequences excise fine confiscation business shutdown

1. General provisions

 

• cases regarding excise tax have to be taken care of electronically, unless law specifies otherwise,

• a tax exemption or tax advantage can be applied or enforced if the contents of the transaction or other act on which it is based meets the conditions of the rule and the tax benefit.

 

2. Excisable products

 

Energy products, beer, still and sparkling wine, other still and sparkling fermented beverages, intermediary alcoholic products, alcoholic products, and tobacco products.

 

The most popular energy products:

• petrol

• petrol and alcoholic mixtures (for example: E85, E10, E5)

• gas oil

• biogas oil (FAMAE)

• natural gas

• LPG (vehicle gas, bottled gas, forklift gas)

• electricity

• coal

• fuel oil

• lubricating oil

• petroleum

 

CN code: the eight-digit goods classification number specified in the Combined Nomenclature that forms Annex 1 to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff.

 

By CN code:

• 2701 11 00-2702 20 00, 2704 00 10-2716 00 00, 2901 10 00-2902 90 00, 3403 11 00-3403 99 00, 3811 11 10-3811 90 00, 3814 00 90, 3817 00 50, and 3817 00 80,

• 1507 10 10-1518 00 99, 2710 12 11-2710 12 90 containing ethyl alcohol, 3824 84 00-3824 88 00, 3824 91 00, 3824 99 86-3824 99 96, 3826 00 10, 3826 00 90, and 2905 11 00 offered, sold, or used as fuel or for heat,

• 2207 20 00 offered as partially or fully denatured and offered, sold, or used as fuel or for heat,

• in addition to the specifically named energy products, all products offered, sold, or used for the purpose of use as fuel and the hydrocarbon offered, sod, or used as fuel or for heating also qualify as energy products.

 

Beer

 

Beer is an alcoholic beverage fundamentally made by fermenting a liquid (wort) of malted barley or wheat, water and (usually) hops.

 

“Alcohol-free” beer (including flavoured alcohol-free beer) does not qualify as beer if its alcohol content does not exceed 0.5% by volume.

 

By CN code:

2203 00 01-2203 00 10 and, of 2206 00 31-2206 00 89, the mixture under 2203 00 01-2203 00 10 and alcohol-free beverages, on condition that the actual alcohol content of the product exceeds 0.5% by volume in the case of both.

 

Fermented beverages other than beer: sparkling and still wine, and fermented beverages

 

Sparkling wine

 

Sparkling wine: champagne made from grape wine made according to the technical rules of the wine, sparkling wine, and semi-sparkling wine, if they meet the following conditions:

 

• 2204 10 11, 2204 10 13, 2204 10 15, 2204 10 91, 2204 10 93, 2204 10 94, 2204 10 96, 2204 10 98, 2204 21 06, 2204 21 07, 2204 21 08, 2204 21 09, 2204 22 10, 2204 29 10, 2205 10 10, 2205 10 90, 2205 90 10, 2205 90 90,

• Alcohol content may be between 1.2 and 15% by volume and may originate from fermentation only (i.e. no alcohol may be added during production),

• in predefined packaging.

 

Other sparkling fermented beverages

 

Products where the CN code, packaging, or pressure value meets that specified for sparkling wine but contain added alcohol. Their alcohol content may not exceed 13% by volume.

 

The products that meet the packaging and pressure conditions of sparkling wines and falling under the 2206 00 31 and 2206 00 39 CN codes also qualify as other sparkling fermented beverages if their alcohol content does not exceed 13% by volume; the alcohol content of beverages made by fermentation only may not exceed 15% by volume.

 

Still wine

The still wine under the CN code 2204 10 11-2205 90 90 is practically the same as what is traditionally referred to as grape wine, taking into account the range of the products listed as exceptions under sparkling wine and other sparkling fermented beverages. Of wine products, new wine still in fermentation and partially fermented grape must with an alcohol content exceeding 1.2% by volume also qualify as still wine.

 

Other still fermented beverages

• Products with an alcohol content of no more than 10% by volume and classified under categories 2204 or 2205 which do not meet the conditions of any of the above categories (e.g. fortified wine, wine flavoured with alcoholic extracts).

 

• With the exception of beer and products classified as sparkling, the products under category 2206 where the alcohol content

• is between 1.2% and 10% by volume, OR

• is between 10% and 15% by volume, the entirety of which is from fermentation (spritzer, fruit wines, cider, sugar mash).

 

Intermediary alcoholic products

Intermediary alcoholic products is a collection of the alcoholic beverages under CN code 2204 10 11-2206 00 89 that do not qualify as beer or other fermented beverages. The alcohol content of goods considered intermediary alcoholic products may not exceed 22% by volume.

 

Alcoholic products:

a) A product under the CN code 2204 10 11-2206 00 89 where the actual alcohol content exceeds 22% by volume. These CN codes include the fermented beverages described above. If the alcohol content of the product exceeds 22% by volume, for excise purposes the product qualifies as an alcoholic product instead of a fermented beverage. For example, a high alcohol-content wine fortified with alcohol can be considered such a product.

 

b) A product under the CN code 2207 10 00-2208 90 99 where the actual alcohol content exceeds 1.2% by volume. This includes a whole range of what are generally referred to as alcoholic products: distilled drinks, spirit drinks, liquors, pálinka, spirits, denatured alcohol, etc.

 

c) the product that contains the product under CN codes 2207 10 00-2208 90 99 in a dissolved or undissolved state that does not fall into the codes under points (a) or (b) and the actual alcohol content of which exceeds 1.2% by volume. The alcoholic products under point (c) include a number of products that we would not think of at first glance. For example, they include the E10, E5 and E85 fuels, alcoholic tinctures, various pharmaceutical products, alcoholic food supplements, flavourings, fruits conserved in alcohol, various cleaning agents, etc.

 

In light of the fact that different rules apply to the different types of alcoholic products, it is very important to clarify the point of the act on excise tax under which the given product qualifies as an alcoholic product. For example, the majority of the products under type (b) may be produced and sold only in possession of a licence, which is not true for all of the alcoholic products under point (c).

 

Tobacco products

• cigarettes,

• cigars and cigarillos,

• fine-cut smoking tobacco,

• other smoking tobacco,

• e-liquid,

• novel tobacco product categories,

• smokeless tobacco products,

• nicotine-containing products as a substitute for smoking

 

E-liquid

A liquid used to fill e-cigarettes or electronic smoking imitation devices during manufacturing, including the liquids used to refill e-cigarettes and electronic smoking imitation devices, allowing them to be reused.

 

It is important to note that in itself, the e-cigarette is not an excise product, while the e-liquid in it or manufactured for its use is.

 

Smokeless tobacco product: a tobacco product not involving a combustion process, including chewing tobacco, nasal tobacco and tobacco for oral use.

 

Nicotine-containing products as a substitute for smoking: a product containing nicotine – and not containing tobacco and not qualifying as an e-cigarette, a refill cartridge, or a tank – that does not qualify as a drug and the active substance of which enters the human body through the mouth (via the mucous membrane).

 

Tax rates

 

Most important energy products

if the current average price published on the NTCA website and determined on the basis of the Brent daily price exceeds 50 United States Dollars (hereinafter: USD)/barrel (hereinafter: crude oil world market price)

• petrol: HUF 120 000/thousand litres,

• petroleum: HUF 124 200/thousand litres,

• gas oil, biogas oil (FAMAE): HUF 110 350/thousand litres,

 

if the crude oil world market price is less than USD 50/barrel

• petrol: HUF 125 000/thousand litres,

• petroleum: HUF 129 200/thousand litres,

• gas oil, biogas oil (FAMAE): HUF 120 350/thousand litres,

 

• natural gas

• LPG:

• electricity: HUF 310.50/MWh

• coal: HUF 2 516/thousand kg,

• fuel oil:

 

Beer

• Beer produced in small breweries: HUF 810/hectolitre/degree,

• beer: HUF 1 620/hectolitre/degree,

 

Still wine: HUF 0/hl.

 

Other still fermented beverages

• spritzer: HUF 0/hl,

• otherwise: HUF 9 870/hl.

 

Sparkling wine: HUF 16 460/hl.

 

Other sparkling fermented beverages: HUF 16 460/hl.

 

Intermediary alcoholic products HUF 25 520/hl.

 

Alcoholic products

• privately distilled distillate: HUF 0/litre,

• distillate distilled under contracted work, up to 50 litres: HUF 0/hl,

• otherwise: HUF 333 385/hl.

 

Tobacco products

• cigarettes: HUF 26 000/thousand and 23% of the retail sale price, but at least HUF 39 300/thousand

• cigars and cigarillos: 14 % of the retail sale price, but at least HUF 4400/thousand,

• fine-cut smoking tobacco: HUF 23 600/kg,

• other smoking tobacco: HUF 23 600/kg,

• e-liquid: HUF 30/ml,

• novel tobacco products: HUF 15/piece (item) or HUF 70/ml

• smokeless tobacco products: HUF 23 600/kg,

• nicotine-containing products as a substitute for smoking: HUF 23 600/kg.

 

3. Excise guarantee

 

In the interest of providing a guarantee for tax revenues, an excise guarantee has to be paid to cover the tax risk stemming from the production, storage, and transport and the deferred payment of taxes of excise taxes.

 

An excise guarantee shall be provided to cover the tax risk of:

 

The following may be required to provide an excise guarantee:

 

The excise guarantee may be provided in the form of:

 

4. Tax payable

 

Tax becomes chargeable:

 

 

Excisable products imported to Hungary from another Member State as part of the activities of flight attendants are not subject to tax.

 

A tax may be charged for the licence holder, owner, or the person involved in an irregularity receiving the product.

 

5. Exemption from the tax liability

 

General cases of exemption

 

General cases of exemption from under the tax liability:

 

Under the general rules, the following are exempt from under tax liabilities:

 

The following shall be considered members of diplomatic and consular representation (with the exception of Hungarian citizens and persons authorised to permanently reside in Hungary):

 

The rules (conditions, values, and quantities) pertaining to the excisable products that can be imported duty-free from third countries by private persons are set out in a separate decree.

 

In summary, the following criteria have to be met to import the duty-free amount:

 

 

During the trip in question, the exemption shall apply to the lubricants in vehicles required for their correct operation.

 

Fuels imported duty-free may not be used in vehicles other than in the vehicle in which it entered the country, whence the person granted exemption may not remove it, store it, unless for the duration of any necessary repairs, and may not transfer it either for remuneration or free of charge.

 

If the person provided exemption violates this provision, the import duty pertaining to the product in question will become payable as at the day of the failure to fulfil the obligation, which shall be imposed on the basis of the customs tariff applicable to the type of goods and the customs value assessed or approved by the NTCA on the given day.

 

Special rules of exemption in case of energy products

 

In addition to the general rules, the following are exempt from under tax liabilities:

 

In case of the provision of aviation fuel for aircraft performing non-private aviation activities:

 

Special rules of exemption in case of alcoholic products

 

The following are exempt from the tax liability:

 

6. The transport of excisable products in duty-suspension arrangements

 

Excise tax does not have to be paid for excisable products transported in the European Union – thus also including transport passing through a third country – until the product is put into free circulation (duty-suspension arrangements).

 

The common rules for transporting excisable products

 

Excisable products may be transported in the European Union by way of duty-suspension arrangements, thus also including transport passing through a third country, by the authorised warehousekeeper from the tax warehouse or by the registered consignor from the place of import to

 

Transports starts when

 

Transport is completed

 

The transport of excisable products involving Community duty-suspension arrangements are supervised by the Excise Movement and Control System (EMCS).

 

Transport can be started only with electronic accompanying documents and receipt can be certified only with an electronic acknowledgement of receipt.

 

The authorisation holder may send excisable products with duty-suspension arrangements only if it issues draft electronic accompanying documents for the removal from the warehouse.

 

The electronic accompanying documents shall include

 

As supplemental data, the draft electronic accompanying documents shall specify

 

When the excisable products arrive at the place of destination, the domestic consignee is required to promptly issue and submit to the NTCA the electronic acknowledgement of receipt containing the actual qualitative and quantitative data, and any supplemental data, of the product.

 

As supplemental data, the electronic acknowledgement of receipt shall specify

 

The NTCA shall issue the electronic report of export for the excisable products transported with duty-suspension arrangements to third countries

 

The NTCA shall use the EU electronic system to forward the electronic report of export to the authority competent in the Member State of origin or the domestic consignor of the excisable products.

 

In the case of excisable products transported to third countries via duty-suspension arrangements, the electronic report of export will be issued by the competent authority of the Member State of export if the place of export under customs law is another Member State.

 

The competent authority of the Member State of export shall use the EU electronic system to forward the report of export to the NTCA, which will then send it to the consignor of the excisable products.

 

The completion of the transport involving the duty-suspension arrangements is certified by

 

In absence of the above, the following may be used to certify completion of transport:

 

The following constitute transport irregularities:

 

7. Retail and wholesale

 

Traders with excise licences (wholesalers) and excise retailers may pursue commercial activities with excisable products released for free circulation (taxed).

 

Taxed excisable products may be transported domestically for commercial purposes in possession of a delivery note.

 

Excise licence trading

 

The following may be performed in possession of an excise licence issued by the NTCA:

 

Traders with excise licences shall keep reports, based on which it shall report data using the electronic form NAV_J09.

 

Traders with excise licences may acquire excisable products domestically only

 

In possession of a licence acquired in advance, excisable products may also be purchased from persons other than the above.

 

Traders with excise licences may not purchase or sell excisable products with cash unless the purchase is made by a private person.

 

Those payment solutions comply with the provisions excluding the possibility of cash payment that do not involve cash exchanging hands.

 

Traders with excise licences shall issue an invoice for the sale of excisable products that includes the excisable products CN code and the trader’s licence number.

 

Retail excise activities

 

Notification has to be provided to the commercial authority for the pursuit of retail excise activities.

 

The purchase of excisable products

 

Retailers with excise licences may acquire excisable products domestically only from

 

In special cases, the NTCA may allow the purchase of excisable products from persons other than those listed above.

 

Retailers with excise licences may only purchase excisable products with cash if the total value of such goods does not exceed HUF 200 000:

 

Filling stations

 

Retailers with excise licences may sell

.

Aviation fuel at filling stations used to service aircraft may be sold only from storage tanks; with the exception of natural gas, fuel may be sold at other filling stations only from storage tanks with the use of dispensers.

 

8. Taxation and procedural rules

 

The use of seals

 

Authorised warehousekeepers may release for free circulation and importers may import tobacco and alcoholic products only if they are sealed, and the products must be sealed for domestic sale.

 

Some exceptions:

 

Seals are issued by the State of Hungary and are made available by the NTCA to applicants based on their orders

 

The following may request seals:

 

Applying and replacing seals

 

The seal shall be applied to the smallest unit of primary packaging in a manner that ensures it cannot be removed without damages and, with the exception of tobacco products, is torn when the packaging is opened. All of the text and the data on the seal shall be clearly visible (with the deviation specified in the Implementing Regulation).

 

Tax refunds in the case of the excisable products to be sealed

 

The condition is that the licence holder remove the seal from the excisable products to be sealed in the presence of the state tax and customs authority and either destroy it or invalidate it by affixing a new seal.

 

The authorised warehousekeeper, registered trader:, and the importer may request the refund of the tax for tobacco products returned from free circulation if

 

In case of a tax refund, the lowest retail sale price published by the NTCA in the period between the application of the domestic seal or the release for free circulation or arrival in Hungary and the day of the submission of the tax refund request to the NTCA may be taken into account as the retail sale price for cigarettes, cigars, cigarillos, and smoking tobacco.

 

If the seal of an excisable product to be sealed and released for free circulation is damaged or comes off the product, the trader or retailer with an excise licence shall withdraw it from circulation and store it separately.

 

Data reporting concerning seals

 

The party requesting seals shall submit data to the NTCA on the workday following

.

 

The requesting party shall affix the seals received and delivered to the Member State within three months of receipt or, in case of seals delivered to a third country, six months of receipt, to the excisable products to be sealed, or shall be required to bring them back to Hungary.

 

Tax assessment and tax returns

 

The taxpayer assesses, submits the tax return, and pays the tax via self-assessment.

 

In case of self-assessment, the tax base and the payable tax has to be determined per calendar month.

 

The National Tax and Customs Administration of Hungary (NTCA) assesses the excise tax payable

 

No tax return has to be filed for still wine and spritzer for which the tax rate is zero.

 

With the exception of termination via winding-up and voluntary liquidation proceedings, the authorised warehousekeeper shall be required to submit a tax return within 30 days of the lapse of the validity of the tax warehouse licence.

 

In case of termination via winding-up or voluntary liquidation proceedings, the provisions of the Taxation Act, the act on public company information, company registration and voluntary liquidation proceedings, or the act on bankruptcy and winding-up proceedings shall be considered governing.

 

For the purposes of information, the NTCA shall send the data to be used as the basis of the tax return to the taxpayer within 10 days of the end of the target month.

 

The taxable person may send any requests for rectification to the NTCA within 5 days of the receipt of such data.

 

Each month, the taxpayer shall pay the difference between the advance tax and the assessed net tax

 .

 

Advance tax

 

The authorised warehousekeeper (with the exception of authorised warehousekeepers who seal only with tobacco products) shall pay the advance tax by the 25th day of the target month if its tax liability in the same quarter of the previous year had amounted to at least HUF 6 million. The advance tax is equal to one sixth of the tax liability incurred in the same quarter of the previous year.

 

Tax refund

 

The frequency of tax refunds is in line with the general rules; the claimant may apply for the tax refund:

.

 

Certification of exemption from under the tax liability

 

Certification from under the tax liability has to be provided as specified elsewhere.

 

Administration

 

Excise affairs can be managed electronically using the information system provided by the NTCA or via the direct connection established with the NTCA.

 

 

Parties entitled to make the choice may choose between traditional and electronic contact in any part of the procedure.

 

Compulsory CN classification

 

If requested or ex officio, the NTCA may issue compulsory CN classifications for excisable products produced, used, or purchased, as well as for products where production requires the use of excisable products.

 

The CN classification may be enforced regardless of appeals, and its provisions shall be applied from the day following the promulgation of the decision.

 

Destruction

If the entitled party intends to validate a tax refund or exemption from under tax liabilities, excisable products may be destroyed in the presence of the NTCA.An exception is the destruction of waste generated during the course of the production of alcoholic products.

 

The use of official seals

The authorised warehousekeeper and the holder of the right of use shall notify the NTCA of any changes to be carried out involving measuring instruments or equipment with official seals, or the official seal itself.

 

No notification is necessary if the change was necessary due to an accident, for the prevention of a malfunction that would have caused damages, or the avoidance of the consequences thereof.

 

The authorised warehousekeeper and the holder of the right of use shall promptly notify the NTCA of any disturbances or irregularities involving the operation of the measuring instrument or equipment affixed with an official seal and affecting the accuracy of measurement or the manufacturing technology.

 

Sampling

In order to validate exemption, the authorised warehousekeeper shall be required to take a sample in the manner specified in the sampling rules and draw up a report on the sampling procedure.

 

9. Excisable products inspections; legal consequences

 

The tax authority may initiate an inspection of any party that comes into contact with, possesses, or pursues any activities in connection with excisable products.

 

The main characteristics of such inspections:

 

Legal consequences applicable for violations of excise laws

 

Excise fine

 

An amount between twice and five times the economic losses caused to the central budget, in line with the severity of the violation, determined by exercising discretionary powers, but equal to at least HUF 30 000.

 

A different fine may apply to products with a zero tax rate (other controlled mineral oil, still wine, spritzer, LPG).

 

The economic loss is the loss of tax revenue and the unauthorised tax refund suffered by the state budget as a result of the violation of the obligation.

 

In case of violations for which no fine is imposed in the manner set out above, an excise fine of

 

If the trader pursuing commercial activities requiring an excise licence does not have an excise licence, the basis of the fine is the product of the excise guarantee specified for the excise licence according to the sphere of the trader’s products and the number of days for which the trader pursued the activity without a licence until the imposition of the excise fine. The rate of the fine is the product of the fine base and one 365th of twice the central bank base interest rate as at the imposition of the excise fine, but at least HUF 500 000.

 

In case of a violation of the rules for producing, storing, and trading dried and fermented tobacco, the rate of the excise fine is HUF 100 000 per kilogram.

 

The rate of the excise fine for the production or possession of sugar mash outside of a tax warehouse, is HUF 3 000 per kilogram, but at least HUF 100 000.

 

Reducing the amount of or omitting the imposition of the excise fine

 

In circumstances deserving of exceptional equity, the amount of the excise fine may, ex officio or at request, be reduced, or the imposition thereof may be omitted.

 

When reducing the amount of the excise fine, the authority considers all of the circumstances of the case, this especially the product involved in the irregularity, the quantity of counterfeit or illegally obtained seals or official seals, the amount of unpaid but legally due taxes, and the gravity of the wrongdoing of the infringing person.

 

In case of circumstances deserving of exceptional equity, the tax authority may opt not to impose the excise fine. This is possible if the tax authority determines, on the basis of the circumstances, that the person who perpetrated the violation proceeded in the given situation with the level of circumspection that can be expected of it.

 

Application of accelerated procedures

 

In case of any breaches of obligation uncovered during the excise inspection where the economic losses caused to the central budget do no exceed HUF 20 000 (or, in the case of tobacco products, HUF 28 000), the person performing the excise inspection may impose an excise fine on-site as part of an accelerated procedure, which may be payable on-site.

 

If the owner of the product acknowledges the violation as well as the information on the legal consequences and renounces the right to legal remedy, the tax authority will confiscate the seized excisable products.

 

In case of accelerated procedures, the amount of the excise fine is HUF 20 000 or HUF 28 000 for tobacco products.

 

Seizure and confiscation

 

Seizure always precedes confiscation; however, confiscation does not necessarily always following seizure.

 

In the course of its procedure conducted for excise purposes, the NTCA may seize any items (with the exception of live animals) in the interest of clarifying the circumstances and to enforce confiscation.

 

The authority orders the seizure via an order. An appeal may be lodged against the order by any persons whose rights or legitimate interests are directly affected, with a reference to a violation.

 

The objection must be submitted to the NTCA within 8 days of notification of the order.

 

The NTCA shall assess the objection within 15 days of submission. The objection does not suspend enforcement of the seizure.

 

The NTCA shall confiscate the seized item

 

Shutting down the business

 

The business of a person who pursues commercial activities involving excisable products and who violates the rules of free traffic commerce may be shut down.

 

The duration of the shutdown shall be

The NTCA directorate with territorial jurisdiction proceeds in the excise tax cases of domestic persons.

The NTCA Large Taxpayer Directorate (KAVIG) has sole competence for proceeding in cases involving the excise taxes of foreign persons.

The NTCA Appellate Directorate (appeals shall be addressed to the Appellate Directorate but submitted to the Directorate proceeding in first instance)

If you have any additional questions, please do not hesitate to contact us at any of the contact points below.

 

Web:

Email:

Phone:

 

The NTCA Hotline and the ÜCC are available Monday to Thursday 8:30 am to 4:00 pm and Friday from 8:30 am to 1:30 pm.

 

*A client ID or Identification by Telephone with a Partial Code (RKTA) is required for using the system. If you do not have a client ID, you can request one using the TEL form, which you can submit to the NTCA in person or using the KÜNY repository. If you are using the ÜCC on someone else’s behalf, you also need to submit an EGYKE datasheet.

 

In person:

Find a customer service centre: https://nav.gov.hu/nav/ugyfelszolg

 

 

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Act LXVIII of 2016 on Excise Tax

Government Decree No 45/2016 of 29 November 2016 on the implementation of certain provisions of Act LXVIII of 2016 on Excise Tax

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