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EC Launches Infringement Procedure Against Hungary Because Of Pálinka Tax Rules

Tamás Székely 2015.02.28.

The European Commission has launched another infringement procedure against Hungary for a violation of European Union excise tax rules on pálinka, the country’s eau de vie.

Vanessa Mock, the EC’s spokesperson for tax and customs affairs, confirmed that the body is of the opinion that Hungary failed to comply fully with a ruling by the European Court last spring requiring the elimination of a full tax exemption for pálinka distilled for private consumption.

Legislation in force since the autumn of 2010 allowed Hungarian households to distil for personal consumption the equivalent of 50 litres of pálinka containing 86% alcohol tax-free every year. But an EU directive allows only a 50% reduction on the normal excise rate for such distillates.

To comply with the decision, Hungarian lawmakers raised the excise tax on pálinka distilled for private consumption by contract distillers to 50% of the normal rate, but introduced a flat tax of just 1,000 per year for Hungarians who distil pálinka at home.

via hungarymatters.hu photo: János Marjai – MTI