Hungary to lower VAT on internet in two rounds

History

The Hungarian government is planning to lower the VAT on internet services from 27% to 18% as of 2017, and further to 5% as of 2018, Tamás Deutsch, the prime minister’s commissioner for the Digital Welfare Program, said this morning on state-owned all-news channel M1, according to reports.

The Hungarian government had shown commitment lately to reducing the VAT rate on internet services, even though EU Commissioner for Economic and Financial Affairs Pierre Moscovici asked the Hungarian government to postpone a reduction of VAT on provision of internet connections, in a letter sent to Hungarian Economy Minister Mihály Varga in mid-July.

Moscovici wrote that he supported the government’s intention to foster digitalization, but said current EU rules do not allow Hungary’s government to reduce the VAT on internet subscriptions. He added that the European Commission aims to change the related directive and introduce more flexible regulations, but these changes will materialize later than expected, so he requested a delay in the reduction. 

The secretariat of the Digital Welfare Program, which is charged with aiding the country’s technological and digital development, confirmed in mid-August that the government would most probably reduce the VAT rate on internet services from 27% to 18%, as approved by the Hungarian Parliament in early June.

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