Wednesday, 18 September 2019

Would you like to install a recharging point? Claim corporate income tax base allowance!

As of 1 July 2017, according to the Act on Corporate Income Tax, companies could apply for a tax base allowance in case they are supporting the installment of a basic recharging point infrastructure required to use electric vehicles.

Conditions and rules for claiming the actual allowance
The tax base allowance can be claimed in a lump sum in the tax year when the investment was completed at the taxpayer’s decision, which cannot be changed by self-revision later. So, if the taxpayer could have legally exercised the right to claim the allowance but failed to do so for any reason, or did not claimed the maximum available amount, it cannot be modified by self-revision subsequently.
The rate of the sum on tax base to be reduced is the cost of the recharging point up to the non-profitable amount.

It is calculated as follows:
  1. First of all, it should be estimated that how mush operating profit will be realized by the actual recharging point during three year period following the date of finishing the investment.
  2. If the estimated amount is less than the cost, the difference between the two will be claimable as a tax base decreasing item.
  3. In case the expected operating profit reaches or even exceeds the cost (i.e. the investment ‘compensated’), the decreasing item cannot be claimed.
If it turns out - at the end of the 3-year period in the possession of factual data - that the investment has been better returned than expected, then the amount previously deducted from the pre-tax profit shall be modified by self-revision, without having to pay any surcharges. Therefore, it is recommended to initially set a higher amount of deduction, then return it after 3 years without penalties, because otherwise the maximum available amount cannot be claimed later. However, the amount of the deduction may be limited in case the allowance is considered as a state aid under the relevant EU legislation. So, the claimed amount - per recharging point - cannot exceed the forint equivalent of EUR 20 million calculated by a tax rate of 9%, approx. HUF 540 million. According to the transitional provisions, the tax base allowance might be applied for the first time to investments started after 30 June 2017 regarding its mid-year introducing.

Income tax of energy suppliers
The allowance of installing electrical recharging points might be claimed under almost the same conditions in the system of the income tax of energy suppliers too, with the provision that the allowance can be claimed for the same charging station only in one tax type. Thereupon the law excludes the possibility of double-allowances. In case of energy suppliers, it is also possible to take over the non-claimed decreasing item from an affiliated company by the means of a declaration.