Tax incentive for energy-efficiency investment projects

It’s worth to invest in energy efficiency more than before! Not just energy and cost can be saved, but corporate tax incentive is supporting the companies efforts in energy efficiency!

The No. 176/2017. (VII.4.) Government Decree on the details of the corporate tax incentive for investment projects aimed at energy efficiency has been published.

Projects become eligible for the tax incentive through certificates issued by energy auditors or auditing organisations listed by the Hungarian Energy and Public Utility Authority. The MN6 Energy agency is a certified energy auditor company, assisting companies in maximaising the energy efficiency efforts.

Before launching a project, the energy auditing organisation provides the company with preliminary audit information, with which the rate of possible savings on the planned investment can be calculated. The energy savings have to be measured considering the baseline, regulations, or in exceptional cases, against the energy savings of a similar asset with the lowest energy efficiency available on the market.

After the project is put into operation, a final energy audit has to be prepared and the auditor issues a certificate.

The tax incentive may only be claimed in connection with projects aimed at energy efficiency launched after 1 January 2017, and only for eligible expenses incurred after the start of the project.

The Government Decree also includes a transitional provision for those who launched the project after the amendment to the corporate tax act has entered into force, but before the Government Decree was published. In this case, the preliminary audit information can be provided to the taxpayer after the project was launched.

In light of the above, we recommend reviewing whether planned investments are eligible for the energy efficiency tax incentive. The tax incentive is up to 40% of eligible costs (but not more than the HUF equivalent of EUR 15 million at present value), and can be used at the earliest in the tax year in which the project became operational, and in the following five tax years. The project must be operated for at least five years.

The MN6 Energy Agency is cooperating with tax advisor companies in order to maximise the tax incentive. In case of any further questions, please do not hesitate to contact our team of energy experts!