Excise tax exemption for biofuels

From 1 July 2007 a tax reduction to 0% excise tax will apply for biofuels blended up to 4.4% of the volume of gasoline and from 1 January 2008 this tax exemption will also apply to 4.4% of biodiesel blended into diesel.

Fuel distribution companies not complying with the 4.4% requirement will have an extra tax burden of HUF 8 per litre of fuel at the wholesale level. In addition, as of 1 January 2007 the bioethanol component of fuel E85 (defined as containing at least 70% bioethanol) is exempt from excise duty.

The excise reduction has been enacted as part of the government of Hungary’s decision in 2006 setting a target of achieving 5.75% of biofuels as a proportion of the energy content of total fuel consumption for transport by 2010.