Hungary, increase in standard VAT rate
01-07-2009

Increase in standard VAT rate & introduction of a second reduced VAT rate effective 1st of July 2009

Further to the recent amendments made to the Hungarian VAT legislation, the current standard 20% VAT rate will be increased to 25% with effect from 1st of July 2009.
Moreover, in addition to the current reduced 5% VAT rate, a second reduced VAT rate will be introduced from 1st of July 2009 at the rate of 18%.

The new reduced VAT rate will be applicable to such goods as milk, certain dairy products, bread and other bakery products as well as to the supply of heating to households.

The new VAT rates become applicable from 1st of July 2009. Please find below some transitional rules with regards to periodic settlements and payments by installment.

• 20% VAT rate should be applied if the period to which a settlement or payment by installment refers to ends before the 1st of July 2009;
• If the period, to which a settlement or payment by installment refers to, begins before but ends
  after the 1st of July 2009, two partial subsettlements should be made from a VAT perspective, i.e. the relevant VAT rates (20% and 25%) will have to be applied for the respective sub-periods.