The two guilds made a joint recommendation

The Guild of Hungarian Confectioners (MCIOI) and the Guild of Hungarian Restaurateurs (MVI) have prepared a joint recommendation for modifying the VAT rules in the hospitality sector. According to the amendments of Act 127 of 2007 on Value Added Tax (VAT Act), from 1 January 2018 the VAT in the hospitality sector reduced to 18 percent, and a year later it drops further to 5 percent. Unfortunately the new rules don’t apply for food and drinks sold as take-away or delivered to the buyer’s home.

The rules laid down by the VAT Act are rather complex, for instance there are three VAT rates applied in confectioneries at the moment: 5 percent (food and drink consumed on site), 18 percent (certain baked goods bought as take-away) and 27 percent (in any other case). What does the trade want? 1. To introduce the 5-percent VAT for take-away consumption too. 2. To apply the 5-percent VAT for all alcohol-free drinks. 3. To introduce the preferential VAT rate for public sector catering, workplace cafeterias, event catering and all alcohol-free drinks. 4. To apply the preferential VAT rate for all hospitality services, all alcohol-free drinks and take-away selling.

All of the recommendations seek to establish a realistic, practical and simple system that in line with European practices. Extending the preferential VAT rate would also make it possible for hospitality business owners to increases salaries – this would be helpful in solving the problem of the workforce shortage too. //