The tax exemption on pálinka brewing is under examination by the European Union’s Court of Justice

The Government assures Hungarians those rights that citizens of other EU countries are also entitled to. The European Commission disputes the regulation providing tax-free status for distilling home-made pálinka; in their view the exemption is in breach of EU regulations. In the opinion of the Government, however, the relevant Hungarian legislation is fully in accordance with EU legal requirements.

Without a doubt, based on historical traditions, distilling pálinka has always been a part of Hungarian cultural heritage, and Hungary intends to sustain this tradition just like other EU countries do. That was one of the reasons why the Government liberalized the distilling of home-made pálinka by abolishing the tax on the subcontracted distillation of spirits. By keeping this regulation effective, Hungary wishes only similar rights than those granted to several other EU member countries, among others Austria, Germany, Slovenia or Portugal.

Consequently, the Government does not plan to tighten regulation on home-made pálinka. Hungary is ready to defend its legal standpoint at the European Court of Justice if required.

(Ministry for National Economy)