At the meeting of the European Union’s finance ministers, the tax exemption of home distilling was on the agenda again, Finance Minister Mihály Varga informed the press after the meeting. The Hungarian Minister said the majority of EU Member States support the adoption of a new directive which would lay down that each household would be allowed to make fifty litres of fruit-based spirits annually without the payment of excise duty; however, in the absence of the full agreement of all Member States, no decision has been adopted.

In the first half of 2018, the European Commission tabled a proposal for the modernisation of the excise on alcohol directive, Mr Varga recalled. He said the proposed amendments offer measures which primarily serve to remove barriers for small and medium-sized businesses in the EU. Member States were only unable to come to an agreement on exempting spirits distilled for own consumption from excise payment. The proposed compromise suggesting that each household would be allowed to make 50 litres of fruit-based spirits annually tax-free is acceptable for us. Therefore, we sincerely hope that all disputes will soon be brought to a satisfactory conclusion, and a uniform decision will be adopted regarding tax exemption. In 2010 the Hungarian government made ‘pálinka’ distilling tax-free up to a fixed quantity. Brussels, however, instituted infringement proceedings against us due to this measure. In 2015 Hungary achieved preferential rules; at the same time, the abolition of even these provisions which imposed lesser burdens continued to remain the goal, the Minister recalled.

In the context of the debate on the taxation of the digital economy, Mr Varga said Hungary wishes to support a solution which is based on a broad-based compromise and avoids double taxation. We reject all proposals which would tax the profits of businesses based on the level of corporation taxation, disregarding actual business activities and existing international standards. With regard to the fact that the low level of the corporation tax rate in itself does not amount to tax evasion, the penalisation of such policies is not acceptable. Therefore, Hungary does not support global minimum tax solutions in general.

(Ministry of Finance)