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Hungary challenged on internet VAT


Hungary challenged on internet VAT

The European Commission has requested that Hungary delays its planned cut in VAT on internet services.

The EC believes the planned January 2017 reduction from 27% to 18% VAT is in breach of the EU VAT Directive. In particular, internet service connections are not included in Annex II of the Directive which lists supplies which may enjoy a reduced VAT rate.

In the longer term, the EC does wish to grant member states the right to set more reduced VAT rates as part of the proposed VAT Action Plan. It is not clear yet when this will happen.  If may be that a relaxation comes before the EC significantly progresses court proceedings against Hungary.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.