Hungary moves all dessert-type cheese products to the 18% VAT rate from 1 January 2024

What changed in detail

Act LXXXIII of 2023 on the amendment of certain tax laws, promulgated in Magyar Közlöny on 30 November 2023, added a new point 5 to Part I of Annex 3/A of the Hungarian VAT Act (Act CXXVII of 2007), the list of goods taxed at the reduced 18% rate. The entry covers dessert-type cheese products falling under customs tariff headings 1806 and 2106, with effect from 1 January 2024.

NAV’s tax question 2024/4 explains the background. Curd- or cheese-based products with any cocoa or chocolate content fall under heading 1806; food preparations containing cheese or curd that have lost their cheese character may fall under 2106. Products coated with yoghurt or white chocolate without cocoa are classified under 0406 and were already at the reduced rate before 2024. The amendment was made to give the whole product group one uniform rate. Whether a product is “dessert-type” is decided by the Hungarian Food Codex definition, by composition and production method, not by its trade name.

On timing, the transitional rule in section 364(2) applies the 18% rate where the date determined under section 84 falls on or after 1 January 2024: normally the date of supply, but for advance payments, intra-Community acquisitions, section 60 reverse-charge transactions and certain imports, the date the tax is to be determined.

What it means

The change is spent as a transition and in force as a rate: the products concerned have been taxed at 18% instead of 27% since 1 January 2024. Its practical difficulty was classification rather than the rate itself. NAV stresses that classification is product-specific and, in case of doubt, a matter for its Expert Institute, so a manufacturer with a borderline recipe should not rely on the product’s name or its competitors’ treatment. Advance payments received in 2023 for 2024 deliveries were taxed at the rate in force when the advance was received.