Hungarian government to lower VAT on internet services

VAT on internet services will drop from 27 to 18 percent in 2017, and to 5 percent in 2018

The Hungarian government is planning to lower the VAT on internet services from 27 to 18 percent in 2017, and to 5 percent as of 2018, according to reports.

The Hungarian government has decided to show commitment 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.

Moscovici wrote in a letter to the government, 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.