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Hungary to reintroduce preferential VAT rate for home construction

Construction

Image by Pixabay

Hungaryʼs government has decided to reintroduce a 5% VAT rate on home construction until the end of 2022, Prime Minister Viktor Orbán said in an interview with commercial broadcaster Hír TV after a cabinet meeting on Wednesday, according to a report by state news wire MTI.

Image by Pixabay

Orbán said the proposal to lower the rate again from 27% was made by Katalin Novák, who has shaped the governmentʼs family policy for years as a state secretary but is now participating at cabinet meetings as a newly appointed minister.

The government temporarily reduced the VAT rate on home construction to 5% for the period 2016-2019, supporting a building boom. The number of homes built rose from just under 10,000 in 2016 to 14,400 in 2017, 17,700 in 2018 and 21,100 in 2019. But the numbers were still under the 30,000-40,000 homes built annually in the years before the 2008 economic and financial crisis.

The PM told Hír TV that the cabinet also decided on tax relief and other economic stimulus proposed by the Economic Defense Corps which is coordinating Hungaryʼs response to economic fallout from the pandemic.

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