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Hungary weighs earlier rollout of tax exemption for household pálinka

Hungaryʼs Finance Ministry is reviewing the possibility of introducing a tax exemption on pálinka, the national eau de vie, as early as 2021, a year before a recently issued European Union directive allows the preference, state secretary András Tállai told Hungarian news agency MTI.

Tállai noted that EU directive 2020/1151 - of July 29, 2020 - allows member states to declare fruit distillate for household consumption tax-free up to 50 liters per year from January 1, 2022.

He said Parliament could vote on measures transposing the EU directive into national legislation as soon as the autumn.

At present, a HUF 700 distillate stamp must be purchased for every liter of pálinka distilled for private consumption.

EU directive 2020/1151 allows the full tax exemption for fruit distillate "that is consumed by a private individual, the members of his family or his guests, provided that no sale is involved" and which is "produced by that private individual from fruits owned, grown and supplied by that private individual from a plot of land to which that private individual holds a title". The exemption applies to spirits distilled in small home distilling devices as well as to spirits distilled at larger contract distilleries.

The EU directive also stipulates that member states must "lay down conditions for the purpose of preventing any evasion, avoidance or abuse" of the exemption.