0% VAT on prescription medicines amendment officially enacted

In our previous newsletter, we reported on the bill that would reduce the VAT rate applicable to prescription-only medicines and magistral preparations for human medicinal purposes from 5% to 0%, effective from 1 September 2026.

The amendment has since been adopted without any changes and officially published in the Hungarian Gazette. As a result, the application of the 0% VAT rate from 1 September 2026 is no longer merely a proposal but a legislative change enacted into law.

It is important to emphasize that the amendment introduces a 0% VAT rate, rather than a VAT exemption. Accordingly, the affected pharmaceutical supplies will continue to qualify as taxable transactions. This is particularly significant because the change, in itself, does not restrict the right of the businesses concerned to deduct input VAT.

Given the limited time available for preparation, participants in the pharmaceutical market should review their invoicing and accounting processes, contractual pricing arrangements, as well as the settings of their ERP and billing systems as soon as possible to ensure that the new VAT rate is correctly applied from 1 September. In addition, several practical issues may continue to arise in relation to, among others, free-of-charge supplies, transactions subject to special settlement mechanisms, and the VAT treatment of certain specific pharmaceutical products.

Our experts are available to assist businesses in preparing for the change and to discuss any VAT interpretation issues that may arise in individual cases.