How to claim your VAT back?

In Hungary there is a 20 % tax on all goods, called ÁFA (Value Added Tax), which is included in the price. Foreign visitors can refund the VAT on the purchase they take out of the country when departing. As other European countries, there is a system for a swift, safe cash refund of the VAT named Europe Tax-free Shopping. To use this opportunity you should note the following:

Upon finishing your purchase, ask the shop assistant for your Fiscal Receipt and VAT Reclaim Form, which is your export and tax refund document. You will have it completed along with a Tax-free Envelope which will show the refund offices, where you can receive your refund in cash. A service charge is deducted when the refund amount is calculated.

If you paid cash in the store, be sure to keep your receipts from changing money into Hungarian Forints, along with your receipt and VAT Reclaim Form. If you used your credit card, keep the credit card slip along with the receipt and VAT Reclaim Form.

As you depart from Hungary, have your documents stamped at the border by Hungarian Customs.

You may receive your VAT refund in cash at Budapest Airport and at all border crossings at IBUSZ Travel Agency Offices. If a cash refund is not possible, you should send all your original documents to the named office in the Tax-free Envelope and you will receive the refund to your credit card or bank account or a bank cheque to your home address.

Further information on Tax-free Shopping is available in the tax-free shops, Europe Tax-free Shopping information leaflets and Shopping Guides distributed in hotels, tourist offices, airports and business centers.

The Hungarian Tax System

Hungary has a self-assessment tax system. Taxpayers are required to register, determine their tax obligations, make advance tax payments, file tax returns, make corrections to tax returns, keep records and supply information as required by law.

Corporate Income Tax

Companies incorporated in Hungary are subject to corporate income tax on their worldwide profits. Foreign companies carrying out taxable activities in Hungary are subject to corporate income tax on their net profits derived from Hungarian sources. Hungary has a split-rate corporate income tax system. The standard rate of income tax is: 18% and an additional 23% is payable at the time dividends are paid out of post-1994 after-tax profits. However, tax abatements are available for qualifying companies engaged in certain industry sectors.

Individual Income Tax

Residents of Hungary are taxed on worldwide income. Expatriates are taxed worldwide income if they reside in Hungary for at least 183 days in a tax year. Non-residents are taxed on income from Hungarian sources only.
Under the Hungarian individual income tax system, taxable income is generally taxed at a progressibe rate of 20% to 48% based on income brackets.

Value - Added Tax

VAT is levied on the domestic sale on the importation of goods and services.
A VAT scheme of 0%, 12% and 25% took effect in 1995. The 0% rate applies only to basic medicines and exports of products. VAT of 12% is levied on basic consumer goods, books, newspapers and transportation. A 25% rateapplies to all other products and services.
In 2004 the VAT % has been changed. In general the following rules apply:
- the 0% VAT does not exist any longer, instead we have 5% VAT
- instead of 12% we have 15%
- instead of 25% VAT we have 20%

Excise Tax

Companies selling or importing products listed in the Consumption Tax Act, such as motor vehicles, trucks, alcoholic beverages, tobacco, coffee, chocolate and chewing gum, are subject to excise tax. The tax is calculated either as a percentage ranging from 10% to 90% of the price or as an amount per metric unit sold.

Local Taxes

Examples of taxes that may be levied by the municipal councils:
» Tax on economic activity
» Infrastructure development tax
» Tax on buildings
» Tourism tax, on temporary stay at resorts