Non-EU residents visiting the EU have the option to avoid paying VAT on their purchases in Hungary. This is possible either by shopping duty-free at an airport, or by making purchases at regular stores and reclaiming VAT upon leaving the EU. But how does that work in practice, and what to expect? Learn here.
Especially at airports, you will find several shops that advertise the option for duty-free shopping. This means that under certain conditions, you do not have to pay VAT on your Hungarian purchase. However, this option is available not only at airports: as a non-EU resident, you can reclaim the VAT you paid for other purchases when you are leaving Hungary.
You are eligible for duty-free shopping or a VAT refund under the following conditions:
Read on to find out the details.
You can opt for duty-free shopping or a VAT refund only if you do not have permanent residency in the EU. However, this also means that you can apply even as an EU citizen if you do not actually live in the EU.
When making your purchase, you will be required to verify this information to the clerk at the shop, normally by showing them your passport and an address card.
In Hungary, there is a lower limit defined for duty-free purchases and VAT refunds, which is gross EUR 175. This is not necessarily the price of just one item, but the total of the invoice. Since the official currency in Hungary is the Hungarian forint (HUF), the limit must be calculated in HUF too. This is done yearly, based on last year’s exchange rate. The lower limit for such purchases in 2022 is HUF 63,000.
There is no upper limit to VAT free purchases. However, this tax benefit targets natural persons who buy products for private use. In line with this, consider the amounts and values that qualify your items for commercial quantities in Hungary. Moreover, learn about the customs duties that might apply to certain items both in Hungary and in your country of destination.
When you are making a purchase above EUR 175 at a Hungarian store as a non-EU resident, ask the clerk about their VAT refund policy.
In any case, you will need to ask for an invoice that lists your identification data (name and permanent address); a simple bill is not enough. The data on the invoice must match the data in your ID documents.
The clerk should prepare a VAT refund form for you in 3 copies. The shop will keep one, and you get two. The form must indicate data fields in Hungarian, English, German, French, and Russian, and it should contain the following data:
Once you have made your purchase, you have 90 days to leave the EU if you want to reclaim VAT. Upon leaving, the product must still be “new”, meaning that you cannot start using it, and it is best if it is still in its original box or wrapping.
You can also authorize another person to take your items out of the EU and hand in your VAT refund application. This can happen e.g. if it turns out that you must stay in Hungary longer than expected, so you give the item, the invoice, the refund form, and the authorization to a friend who is going back to your home country.
When leaving the EU, your last stop should be the Customs Office at the border. They will stamp your VAT refund forms, keep one and give the other back to you. The procedure also depends on the original seller and on the place where you are crossing the border. For example, if tax refunds of the store at which you made your purchase is handled by Global Blue and you are leaving the EU through Budapest Airport, you should visit GB’s stand at the airport before check-in, get your documents stamped, and then collect your refund in the transit zone from the Interchange Foreign Exchange desk.
To verify with the seller that everything went according to plan and you have indeed left the EU within 90 days, you will have to send them back the stamped form and the original invoice. Once they have updated their books, they will return the original invoice to you with a note that “VAT has been reclaimed”.
Depending on the procedure chosen by the store, you can:
VAT is refunded in HUF and in cash by default, but you can agree on different terms with the seller. For example, you can also receive refund in EUR to your bank account.
The Helpers Team offers immigration and business assistance to expats living and working in Hungary. Whether you are starting a new business or moving to Hungary with your family, you can count on our expertise. Just fill in the form below to get in touch.
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