Hungarian government: Brussels endangering VAT cut on internet services

Budapest (MTI) – Brussels has “attacked” Hungary’s plan to cut VAT on internet subscriptions, Bence Tuzson, cabinet state secretary for government communications, told a news conference on Tuesday.

He noted that the European Commission had not approved the government’s plan to reduce VAT next year on accessing the internet from 27 percent to 18 percent. The government will continue to fight for this cause, he added. Indeed, it also plans to cut VAT further later on, he said.

Tamás Deutsch, government commissioner for digital welfare, told the same news conference that Hungary disagrees with the standpoint of the commission. “We will defend parliament’s decision to approve the government’s bill,” he said.

Pierre Moscovici, the EU commissioner for economic and monetary affairs, wrote in a letter to Economy Minister Mihály Varga that Brussels supports the government’s endeavours to give a fresh impetus to digitalisation, and this coincides with commission efforts to create a unified digital market. But the current rules preclude reducing VAT, though the commission wants to change this directive and create more flexible rules, he said. Such changes may take place later than expected, he added.

Deutsch said the commission’s standpoint was both “surprising and unacceptable”, since on other matters “such as the forced settlement of migrants”, the commission was quick to change the rules. He said that Hungary planned to reduce the VAT on internet access on January 1, 2017, and he anticipated “tough negotiations” ending with a “reassuring solution”.

In reply to a question, Tuzson said it was conceivable that an infringement procedure could be launched against Hungary if it implements its plan.

Source: MTI