Revenue cap for VAT free operation continues to increase in Hungary

VAT free operation

Small businesses in Hungary may choose to be exempt from VAT if their yearly revenue remains under a certain limit. This provides businesses various benefits, such as reduced administration (as there will be no need to file regular VAT reports), while VAT exempt freelancers are not required to maintain a separate business bank account, this way further reducing their operational costs. Additionally, VAT exempt businesses may find a competitive edge if they primarily sell to natural person customers, since they can offer lower prices (which matters less to business customers that can reclaim VAT).

2026 revenue cap: HUF 20 million

Since the expenses of businesses grow gradually, business operators will inevitably need to raise their prices. If the revenue cap on VAT free operation remained low, businesses would no longer be able to maintain their VAT exempt status even if their operation remained the same (apart from the price increases). By losing the protections of a VAT exempt status, the costs of such small businesses would grow unproportionately, which would jeopardize their operation.

To avoid that, the VAT free revenue cap is increased from time to time, similarly to the minimum wage. Last time it was raised from January 2025, from HUF 12 to 18 million yearly, after a long break. Now the revenue cap is raised again, starting from January 2026, to HUF 20 million. Additionally, further increases have been announced for the future: to HUF 22 million in 2027, and HUF 24 million in 2028.

See the past and planned revenue cap increases for VAT free operation:

Reclaiming your VAT exempt status

Those who forfeit their right to VAT exemption by making revenue above the limit will immediately become VAT subjects. Usually, they cannot reclaim their VAT exempt status for the following 2 years. However, those who forfeited their exemption due to high revenues can become VAT exempt again in 2026 if their yearly revenue was below HUF 20 million in 2025, and below 18 million in 2024. This practice is similar to what we saw last time the revenue cap for VAT operation increased. The same practice is expected to apply in 2027 and 2028.

Obviously, you should choose to become VAT exempt only if you do not expect to cross the threshold of HUF 20 million in revenues in 2026.

Helpers Finance at your service

The accounting team of Helpers focuses on supporting small and medium-sized businesses in Hungary. While most of our clients are subject to VAT, we consider it essential to stay up to date on regulations and provide easily accessible information to everyone who does business here. If you are looking for a reliable accounting partner who has experience working with foreign business owners, look no further: contact us now, and let us find out how we can best support your Hungarian operation.