Having analysed the financial impact of Hungary's new Advertisement Tax Act approved last week, RTL Group has said new legislation may cost its Hungarian unit EUR 15 million (HUF 4.65 billion) this year. The statement comes as an important warning to all foreign investors, RTL said on Monday. The announcement triggered a negative market response.
HUF 4.65 billion tax obligation
RTL Group has issued a statement on Monday morning on the financial impact of advertisement tax in Hungary, finalised last week. In preliminary estimates, RTL's tax obligation may rise EUR 15 million per year (approximately HUF 4.65 billion). The statement reminds that the Hungarian subsidiary had EUR 15 million pre-tax profit in 2013, at EUR 100 million revenue.
Hungary's Parliament passed an amended version of the Advertisement Tax Act last Friday, which boosted RTL's tax obligation massively. The amendment stipulated that loss carryforward from previous years is tax deductible only for companies that posted a loss in the year 2013.
The new tax is progressive, with a 40% tax rate on revenue exceeding HUF 20 billion. In Hungary, RTL is the only media company that falls into that highest category, the press release reminded.
Stock market response
RTL had a bad start to the week subsequent to the announcement. The share price has lost 1.7%, currently at EUR 80.6.
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