Budapest, October 15 (MTI) – Distilleries in Hungary have produced 2 million litres of fruit brandy palinka this year, less than 20 percent of the amount distilled in 2014; the drastic drop largely resulted from the elimination of tax exemption for home distillation of spirits from January 2015, daily Magyar Idok said on Thursday.
Legislation in force since the autumn of 2010 allowed Hungarian households to distill for personal consumption an equivalent of 50 litres of palinka containing 86 percent alcohol exempt of tax every year. But an EU directive allows only a 50 percent reduction on the normal excise rate for such distillates.
To comply with the decision, Hungarian lawmakers raised the excise tax on palinka distilled for private consumption by contract distillers to 50 percent of the normal rate, while introduced a flat tax of just 1,000 forints (EUR 3.21) per year for Hungarians who distill palinka at home.
The cost of contract distillation for private consumption has increased from about 700 forints per litre last year to about 1,500 forints per litre due to the spirits tax, the paper said.
At the same time, the number of home distilling equipment has been increasing steadily, exceeding 11,000 in early October, the paper said, citing tax office data based on municipal figures.