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11.03.2019

Most important changes to Hungarian VAT law

Key Facts
  • VAT exemption for services relating to export of goods.
  • From 1 January 2019, 50 per cent of the VAT on car rentals may be deducted.
  • The application period of 5 per cent VAT on the sale of new residential properties was extended.
  • Local reverse charge mechanism still in effect.
  • Provisions regarding the sale of vouchers had been introduced to the VAT law.
  • According to the new regulations, VAT can be considered VAT-deductible during the assessment period.

VAT exemption for services relating to export of goods

The Hungarian law provision allowing the exemption of VAT for services directly pertaining to goods transported outside the EU was amended in order to be compliant with the European Court of Justice’s ruling in ECJ case C-288/16.

Under the Court’s judgement, the exemption on services for transactions pertaining to the transport of goods to a third country does not apply to the supply of services in which the services are not provided directly to the consignor or the consignee of those goods.

Pursuant to the above judgement, a new provision was added to the exemption rule in Hungarian VAT law stating that the exemption for services pertaining to goods transported outside the EU is applicable only if the services are rendered directly to the party exporting the goods.

VAT on rental cars

From 1 January 2019, 50 per cent of the VAT on car rentals may be deducted, including for private use. The VAT deduction rate may be changed to the business use rate if proper documentation of the business use is submitted.

VAT on new residential properties

Under certain circumstances, the application period of 5 per cent VAT on the sale of new residential properties was extended.

Local reverse-charge mechanism

The reverse-charge mechanism on the sale of agricultural and steel products continues to apply after 31 December 2018.

Vouchers

Provisions regarding the sale of vouchers had been introduced to the VAT law. Under the new rules, the sale of single-purpose vouchers qualifies as a sale of goods or services, while the sale of multi-purpose vouchers is taxable only at the time of redemption.

Retroactive VAT deduction

The retroactive deduction of VAT charged before the registration was also possible previously. However, according to the new regulations, such VAT can be considered VAT-deductible during the assessment period (including the date of registration).  

Article published in WTS Global VAT Newsletter Q1/2019
Recent or expected changes in VAT and GST regulations and compliance duties in various EU and third countries
View publication
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