How VAT (AFA) Works in Hungary (2026): 27% Standard Rate, 18% and 5% Reduced
Hungary applies the European Union's highest standard VAT rate, 27% (afa, altalanos forgalmi ado), plus two reduced rates: 18% (certain dairy and bakery products, hotel accommodation) and 5% (basic foods, medicines, books, new residential property). From 1 January 2026 some items moved from 18% to the 27% standard rate. Always verify the correct rate with NAV (nav.gov.hu).
The three AFA rates in Hungary in 2026
Hungary levies AFA (altalanos forgalmi ado, value added tax) at three rates: Standard rate (27%): the default for most goods and services and the highest standard VAT rate in the European Union. It applies to everything not specifically covered by a reduced rate or an exemption. Reduced rate (18%): applies to a defined list including certain dairy products, some bakery goods, and hotel and other accommodation services. Second reduced rate (5%): applies to basic foods such as pork, poultry, eggs, fish and milk; medicines and certain medical products; books, newspapers and periodicals; and new residential property under the housing programme. Zero-rated and exempt supplies also exist -- for example intra-EU supplies and exports are zero-rated (taxable at 0% with input recovery), while financial services, healthcare and education are typically exempt (no VAT charged, and generally no input recovery). Because the standard rate is so high, correctly identifying supplies that qualify for 18% or 5% matters a great deal. Always confirm the classification of a specific supply with NAV (nav.gov.hu) or a VAT adviser.
What changed in 2026
From 1 January 2026, several food items were reclassified from the 18% reduced rate to the 27% standard rate, including confectionery and sugar products, sweetened beverages such as energy drinks and radlers, and salted snacks such as chips and salted nuts. Dietary and medicinal foods on official ministry lists generally remain at 18%. If your business sells food or drink, review your product classifications against the 2026 rules, because an item that was 18% in 2025 may now be standard-rated at 27%. Getting this wrong can lead to under-charged VAT and an assessment by NAV. Rate categories are amended by the VAT Act (2007. evi CXXVII. torveny) and related decrees. Verify the current classification of your products with NAV (nav.gov.hu) before relying on a reduced rate.
Registration and the small-business exemption
Not every business must charge AFA. Hungary offers a small-business VAT exemption (alanyi adomentesseg) up to an annual revenue threshold. Below the threshold a business can opt out of charging VAT (and correspondingly cannot recover input VAT); above it, VAT registration and charging is mandatory. Businesses making cross-border sales within the EU may use the One-Stop-Shop (OSS) scheme to account for VAT on distance sales through a single registration, rather than registering in each customer country. Once VAT-registered you must charge AFA at the correct rate, issue compliant invoices (szamla), file periodic VAT returns, and remit the net VAT (output VAT minus recoverable input VAT) to NAV by the filing deadline. Hungary operates real-time invoice reporting (Online Szamla), so invoice data is transmitted to NAV. Confirm the current small-business threshold, your filing frequency and the OSS rules with NAV (nav.gov.hu) or an accountant.
How AFA works in practice: output tax, input tax and returns
AFA is a consumption tax collected at each stage of the supply chain. As a registered business: Output AFA is the VAT you charge on your sales. You collect it on behalf of the state -- it is not your income -- and must remit it to NAV. Input AFA is the VAT you pay on business purchases. Subject to restrictions, you deduct input VAT as a credit against output VAT, provided the purchases relate to your taxable activity and are supported by valid invoices. Net AFA due = output VAT minus recoverable input VAT for the period. If input VAT exceeds output VAT (common for exporters or during large investment), you may claim a refund, which can be subject to a VAT audit. Because the 27% standard rate is high, cash-flow management of VAT matters: you may collect large amounts of output VAT that must be remitted, and you carry input VAT on purchases until it is offset or refunded. Hungary's Online Szamla real-time reporting means invoice data reaches NAV almost immediately, so accurate invoicing and rate classification are essential. For mixed, cross-border or unusual supplies, consult a VAT specialist. Always verify with NAV (nav.gov.hu).
FAQ
What is the standard VAT rate in Hungary in 2026?
27%, the highest standard VAT rate in the European Union. It applies to all goods and services not covered by the 18% or 5% reduced rates or by an exemption. Two reduced rates (18% and 5%) cover specific categories such as certain foods, medicines, books and new housing. Verify the correct rate with NAV (nav.gov.hu).
Which goods qualify for the reduced 18% or 5% VAT rates?
The 18% rate covers items such as certain dairy and bakery products and hotel accommodation. The 5% rate covers basic foods (pork, poultry, eggs, milk), medicines, books and newspapers, and new residential property. Everything else is standard-rated at 27%. Because categories change, confirm your product's rate with NAV (nav.gov.hu).
What changed for Hungarian VAT in 2026?
From 1 January 2026 several food items -- confectionery and sugar products, sweetened and energy drinks, and salted snacks -- moved from the 18% reduced rate to the 27% standard rate. Dietary and medicinal foods on official lists generally stayed at 18%. Review your product classifications and confirm with NAV (nav.gov.hu).
When must a business register for VAT in Hungary?
A small-business VAT exemption (alanyi adomentesseg) is available up to an annual revenue threshold; above it, registration and charging VAT is mandatory. Cross-border EU sales can be handled through the One-Stop-Shop (OSS) scheme. Check the current threshold and rules with NAV (nav.gov.hu).
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.