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VAT in Hungary

VAT in Hungary

The Value Added Tax (VAT) is one of the main taxes in Hungary. It applies to all of the goods and services produced in Hungary. The standard VAT rate in Hungary is 27% and a reduced VAT rate of 18% applies for dairy and bakery products and hotel services. A reduced rate of 5% applies for the sale of most medicinal products and medical instruments.

Our lawyers in Hungary can provide complete tax planning services in Hungary.

VAT registration for foreign companies in Hungary 

Foreign companies with headquarters not just in the European Union but also in other nations who are conducting businesses in Hungary are eligible to register for VAT in this country. In some circumstances, registering for VAT is required, but some businesses choose to do so voluntarily so they can claim the Hungarian VAT they paid while conducting business.

Without establishing a local business, foreign enterprises can register as VAT payers in Hungary; this is known as non-resident VAT turnover. In Hungary, there is no VAT threshold for non-resident business entity registration, a VAT number must be entered before making taxable supplies.

If you are aware that you must register your foreign company for VAT in Hungary, do not be reluctant to get in communication with our lawyers. They can assist you in detail about the registration for VAT in Hungary. Or you can simply consult our Hungarian lawyers, they can check based on your business whether you need to apply for VAT registration in Hungary or not. 

VAT registration for EU nationals in Hungary 

Hungarian businesses and distance sellers from the EU who sell to Hungary may voluntarily register for VAT depending on the value of their sales. When beginning a taxable activity, VAT payers must notify the Hungarian Tax Authority.

According to Annex 1 of the Tax Rules Act, the name, address, corporate seat, and tax identification number of the taxpayer in any foreign state of domicile must all be provided at the time of registration. 

Our lawyers in Hungary can recommend whether you should register for VAT or not depending on the value of your sales. So, you are welcome to get a legal consultation from our lawyers. 

Entities subject to VAT in Hungary in 2024

All types of companies in Hungary, local and foreign, are subject to the applicable VAT rate. Hungarian legal entities are granted a tax number after they are registered. Non-Hungarian legal entities must also register for VAT if they perform business transactions in Hungary.

Entities that are subject to Value Added Tax (VAT) in Hungary include businesses that engage in taxable supplies of goods or services. This includes businesses that are established in Hungary, as well as those that are not established in Hungary but are required to register for VAT due to providing taxable supplies of goods or services in Hungary. Entities that are required to register for VAT in Hungary must do so with the National Tax and Customs Administration (NAV), and must charge and collect VAT on their taxable supplies. In addition, they are also required to file VAT returns and make VAT payments to the tax authorities on a regular basis.

Foreign investors must submit the necessary documents for VAT registration at the local tax authorities. All documents must be in Hungarian. Our lawyers in Hungary can help you throughout the VAT registration procedure and can also help you open a company in Hungary.

Do you need a representative for VAT registration in Hungary?

Foreign traders are allowed to conduct business through their branch companies that are registered in Hungary. However, they may conduct business operations in the following industries without setting up branch offices if no employees are based in Hungary or are seconded here:

  • artistic works;
  • professional athletic endeavors;
  • implementing international trade agreements through a building, construction, and customer service activities.

Although it is not necessary, a representative (lawyer, legal counsel, taxation expert, or adviser) may also speak with the Tax Authority on behalf of the foreign applicant. If a representative is named, the original copy of the letter of authorization needs to be sent. However, it is not compulsory to hire a representative, but it is always recommended to get legal assistance in such matters.

A foreigner tends to attract more problems in a foreign state due to a lack of knowledge. But getting help from local lawyers can make procedures easier and faster. You are welcome to get in touch with tax lawyers located at our law firm in Hungary. They can help you register for VAT as a foreigner. 

Voluntary and mandatory VAT registration in Hungary 

Foreign businesses can voluntarily register so they can promptly reclaim Hungarian VAT. This may be a useful alternative to the standard non-EU VAT refund process, which permits only businesses from Lichtenstein, Switzerland, Norway, Serbia, and Turkey to recover Hungarian VAT through a somewhat drawn-out and challenging process.

It is possible to register for VAT retroactively, which allows some businesses to register and submit retrospective tax returns for several previous years. Registration for VAT is not restricted to particular nations. However, as the company would be regarded as a Hungarian VAT taxpayer from an administrative standpoint, registration results in an excess administrative load for the business.

When the supply of the foreign company is considered to have occurred following the Hungarian VAT Act and the reverse charge mechanism does not apply, registration for VAT is mandatory. In 2024, the format for VAT in Hungary is HU 12345678. All businesses and distance sellers who need to register for VAT in Hungary can get assistance from our Hungarian attorneys.

Our VAT specialists will be pleased to offer a preliminary evaluation for your company and walk you through a smooth compliance procedure. Furthermore, if you are planning to immigrate to Hungary, you can get in touch with our lawyers. Our immigration lawyers in Hungary can help you in this regard.

Exemptions for the VAT tax in Hungary

Certain businesses may be exempt from the VAT tax in Hungary if they provide goods and services which are exempt from VAT, as stipulated in the Hungarian law:

  • public postal services;
  • the supply of  human organs, blood and milk;
  • dentists and dental technicians;
  • certain education activities;
  • insurance and reinsurance transactions and their related services performed by insurance agents and brokers;
  • credit granting;
  • gambling;
  • the supply of postage stamps;
  • sale of land parcels;
  • leasing or letting of immovable property;
  • activities carried out by public radio and television stations, etc.

Non-profit services providers in Hungary benefit from the VAT exemption for the following services: hospital and medical care, social services, services related to the protection of children, nursery and student hostel services, cultural services, services relating to sports and physical training, education, and social welfare, letting immovable property, and international passenger transport.

Besides assistance with value-added tax, if you are interested in applying for Hungarian residency, you can get in touch with our lawyers. Our immigration lawyers in Hungary can help you to acquire residency in this country without unnecessary delays. 

VAT rates in Hungary

The rates for VAT have been maintained for 2024 in Hungary, so investors do not have to expect any new rules concerning this matter. Companies that are liable to VAT in Hungary have to register with competent institutions. Please find below the currently applicable VAT rates in Hungary:

  • The standard VAT rate in Hungary is 27%;
  • A reduced VAT rate of 18% applies for dairy and bakery products and hotel services;
  • A further reduced VAT rate of 5% applies to the sale of most medicinal products and medical instruments;
  • Hungary has implemented a 5% VAT on the sale of new residential property until December 31, 2024.

At the beginning of 2024, the Tax Authority launched eAFA (e-VAT), a new system that will simplify and ease reporting. Reports can only be produced after the company through their accounting departments have reviewed and authorized them.

To facilitate compliance, several terminologies have been clarified. These contain some explanations regarding the work of dentists and patient transportation, as well as rules for deciding the delivery location in the event of virtual events.

The standard VAT rate will remain 27%. Even if there are a few minor variations, the reduced VAT rates are largely unchanged. More varieties of infant formulas are now offered at the 5% rate, while dairy-based desserts have been shifted to the 18% category.

We can provide complete legal services for company incorporation or company liquidation in Hungary

For a complete list of the goods and services exempt from the VAT rate in Hungary and other applicable conditions, please contact our law firm in Hungary.