New reformist Tisza Party government aims for 5% food VAT to ease cost pressures
Hungary is preparing a significant reform in its VAT regime following the April 2026 election victory of the Tisza Party. At the centre is a proposed reduction of VAT on selected goods, most notably cutting rates on “healthy foods” and firewood from the standard 27% down to 5%, alongside exempting prescription medicines.
This is more than a cost-of-living gesture. It signals a broader policy reset towards simplification and predictability in one of Europe’s most complex high-rate VAT systems.
New government tackles highest VAT rate in EU
Hungary’s 27% standard VAT rate is the highest in the EU. Moving key essentials to 5% materially narrows that base. But defining “healthy foods” introduces classification risk. Expect disputes around product categorisation, particularly for processed foods, supplements, and borderline goods. This is where VAT complexity typically re-enters.
See more in our Hungarian VAT guide.
Compliance impact
For businesses, the change is not trivial:
- ERP and tax engine updates will be required to reflect new rate mappings
- Product master data becomes critical to avoid misclassification
- Audit exposure increases during transition as authorities test boundaries
Without tight controls, reduced rates can increase error rates rather than reduce compliance burden.
Policy reform follows election win
The accompanying commitment to a “simpler, more predictable tax system” suggests further reforms may follow. Hungary has historically relied on high consumption taxes to offset lower direct taxes. This move could indicate a rebalancing by the new government, or at least a targeted softening for politically sensitive categories.
