What is VAT?
VAT (Value Added Tax) is a multi-stage consumption tax applied to the sale of goods and services. Businesses charge VAT on their sales and pay it to the state, while deducting the VAT they have paid on purchases. This ensures tax is only paid on the value added at each stage of production or distribution.
VAT rates in Hungary
- 27%: standard rate (e.g. electronics, clothing)
- 18%: reduced rate (e.g. bakery products, milk)
- 5%: super-reduced rate (e.g. medicine, books, some housing projects)
Why is VAT important?
VAT is a major source of state revenue. For businesses, correct VAT management is crucial to avoid penalties and ensure compliance with tax laws.
Official definition
VAT is a consumption-based tax imposed on the sale of goods and services, calculated based on national tax legislation.
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