On 1 July 2011, the new EU VAT Regulation became directly applicable and therefore takes precedence over domestic VAT laws and practice in all EU member states.

The Regulation contains provisions which explain or interpret the EU VAT Directive and is an important step towards adopting a uniform understanding of VAT rules in the EU.

The key changes affecting VAT in Hungary are:

  • different definitions (from those in the Hungarian VAT Act) for ‘place of establishment’, ‘fixed establishment’, ‘permanent address’ and ‘usual residence’
  • detailed rules on the obligation of taxpayers when checking the tax status of foreign business partners. These include a lot of safe havens which were not clearly available until now
  • detailed explanation of the place of supply of services such as hotel intermediary services and admission to cultural and sporting events
  • a detailed definition of ‘restaurant and catering’ services which means that VAT will be 18% on take-away pastries and bakery products but 25% if consumed in restaurant/catering settings
  • a detailed definition (with examples) of what is and is not to be regarded as electronically supplied services

Law: Council Implementing Regulation No. 282/2011/EU; Council Directive 112/2006/EC