Hungary will abolish VAT on prescription medicines from 1 September, Prime Minister Péter Magyar announced on Thursday. The Hungary prescription drug VAT decision is the latest element of a large tax overhaul launched since the new government and parliament took office in May 2026.

Prescription medicines are currently subject to Hungary’s reduced 5% VAT rate, compared with the country’s 27% standard rate. The government’s decision would bring the tax on prescription-only products down to zero, regardless of whether a medicine is subsidised by the Hungarian health insurance system.

Hungary prescription drug VAT to be abolished from September

The government expects the measure to reduce the amount patients pay for medicines, although the exact saving will depend on pricing rules, health insurance subsidies and whether the full tax reduction is reflected in retail prices.

The change could be particularly important for people living with chronic conditions, elderly patients taking several medicines and those using newer, more expensive treatments.

According to Forbes Hungary, the measure could reduce annual budget revenue by around HUF 7 billion, equivalent to approximately EUR 19.2 million at the Hungarian central bank’s exchange rate on 22 July.

The announcement gives the measure a firm implementation date. Detailed legislation will still determine precisely how the zero rate is applied and how pharmacies and pharmaceutical companies must account for the change.

Five smaller taxes and charges targeted for abolition

The prescription medicine decision follows a separate tax package announced by Magyar’s government on 17 July.

Under the proposal, five relatively minor taxes and charges would be abolished: the special municipal tax, the dog ownership contribution, the immigration surtax, the carbon-quota tax and the transaction charge linked to the carbon-quota tax.

As 24.hu reported, the special municipal tax can currently be imposed by local councils, although only 25 of Hungary’s more than 3,000 municipalities reportedly use it. The dog ownership contribution is levied in 16 municipalities, while the government says the immigration surtax has never generated revenue.

The package was announced as a government decision and prepared for submission to parliament. Until the legislation completes the parliamentary process and is promulgated, the exact dates on which the taxes disappear should be treated as provisional.

Pollution charges to rise despite carbon-tax abolition

Removing the carbon-quota tax does not mean that Hungary’s largest polluters will face lower environmental costs overall.

According to 24.hu, the government also plans to double the air-pollution charge paid by companies. It intends to review the environmental impact of large industrial operators, including their water consumption and the pollution of surface water, groundwater and soil.

Companies that fail to reduce their water use or harmful emissions could eventually face further increases in environmental taxes and charges. The details of these additional measures have not yet been published.

The carbon-quota tax itself had already come under legal pressure. In April, the Court of Justice of the European Union ruled that Hungary’s tax on carbon dioxide emission allowances was incompatible with EU law.

Corporate tax benefits and trust structures face tighter rules

The July package would also narrow selected corporate tax benefits used by large companies and certain asset-management foundations.

The government intends to end a provision under which companies could deduct three times the value of donations made to public-interest asset-management foundations from their corporate tax base.

It also plans to review tax practices connected with Hungarian private trusts, known as bizalmi vagyonkezelés. The government argues that these structures have sometimes been used to shelter large fortunes from taxation, although private trusts can also have legitimate roles in inheritance planning and the generational transfer of family businesses.

HVG said the government expects the tightening of corporate tax benefits and trust-related rules to generate tens of billions of forints in additional annual revenue. This remains a government estimate rather than an independently verified projection.

Wealth tax remains one of the largest planned changes

The most significant structural tax proposal is an annual wealth tax, but it has not yet been adopted.

The government’s current plan is based on a 1% annual tax on the portion of net wealth exceeding HUF 1 billion, approximately EUR 2.75 million. Property, investments, company shares and valuable movable assets could potentially form part of the tax base.

According to Portfolio, Magyar said the relevant legislation could be adopted by the end of October 2026, with the first revenue arriving in 2027. The government estimates potential annual receipts of HUF 300–600 billion, or approximately EUR 824 million–1.65 billion.

Important questions remain unresolved, particularly the valuation of privately owned companies, the treatment of debts and jointly owned family assets, and possible exemptions.

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Other promised tax cuts have not yet been implemented

The government has also pledged to reduce VAT on fruit, vegetables and firewood and to introduce personal income tax relief for people earning below Hungary’s median wage.

One proposal would reduce the effective personal income tax burden on minimum-wage earners from the current 15% to 9%, using a tax rebate or credit. Smaller reductions would apply to earnings between the minimum and median wage.

These measures have not yet received the same firm implementation date as the Hungary prescription drug VAT change.

As Reuters reported, the government has also indicated that the special sectoral taxes imposed on banks, retailers, energy companies, telecommunications businesses and other industries will remain in place for the time being because they provide substantial budget revenue.

The emerging picture is therefore mixed: prescription medicines have received a clear starting date, several minor taxes are included in a proposed parliamentary package, while the wealth tax and broader personal income tax reforms remain under preparation.

Tax/VAT in Hungary – What we know so far: