Hungary is set to reduce the rate of VAT on internet access from the standard rate of 27 percent to Hungary’s reduced rate of 18 percent from January 1, 2017.
However, the EU Commission has asked that Hungary delays its planned cut in VAT on internet services, reminding them that internet access is not currently listed among the services to which reduced VAT rates can be applied.
As part of the VAT Action plan the Commission is looking at proposals to allow Member States flexibly on setting VAT rates, therefore the Commission believes any change should wait until after the consultation. However, comments made by senior figures in the Hungarian Government following these reports suggest that Hungary plans to implement the VAT cut next year regardless.
With Belgium recently announcing that it will reduce the VAT rate on e-books, Hungary potentially pressing ahead with its Internet VAT cut and the UK statements about sanitary products, it would appear that Member States are pre-empting the outcome of any reduced rate consultations and amending VAT rates now. How the EU Commission reacts and manages these developments will be interesting to view.