As part of its Economy Protection Action Package, the Hungarian Ministry of Finance has recently announced plans to reduce Hungary’s tax burden. The measures include slashing the VAT rate for tourist accommodation services to the reduced 5% VAT rate. These changes are anticipated to come into effect in 2020.
The 5% rate of VAT will apply to hotel accommodation and similar tourist short-stay accommodation services. Now, these supplies are generally subject to Hungarian VAT at the 18% reduced rate.
The purpose of this VAT cut is to reinvigorate Hungary’s tourism sector. It mirrors action taken last year by countries such has Austria, Romania and Slovakia. Most Member States already apply reduced rates of VAT within the tourism industry.