Hungary raises VAT to 27% in 2012

Sun 18th Sep 2011

The tax authorities have announced the Hungarian VAT rate will rise from 25% to 27% from 1 January 2012. This follows the last rise from 20% to 25% in July 2009.

This latest hike arises as Hungary attempts to control its rising budget deficit, and reassure nervous currency markets who have been betting against the Hungarian Forint.

In addition to raising the standard VAT rate, there is also a proposal for a super VAT rate of 35% on certain luxury goods. The government is also increasing excise duties and employee contributions to the state health fund.

27% Hungary VAT rate highest in EU

Whilst European countries are free to set their own standard VAT rates, there are some broad rules from the European Union for member states. Standard rates cannot be below 15%. Some years ago, the European Commission did seek to set an upper limit of 25%, but failed to obtain significant support.

For companies with a Hungarian VAT registration, they should ensure proper management of the VAT collections across the implementation period. Whilst for goods and on-off services this is relatively simple, but caution should be exercised for on-going supplies.



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