Representation tax 0%, Tourism contribution 2%, Service fee 20%
- taxandbell
- Feb 3
- 2 min read
Following the Government’s earlier announcement, on 30 January the Government Decree and the NGM Decree introducing tax reductions for the hospitality sector were published in Issue nr. 12. of the Hungarian Gazette.
In his announcement — which we wrote about here — Minister Márton Nagy identified support for the HORECA as the main objective. Restaurant sector is one of the key pillars of tourism in Hungary, yet due to continuously rising costs and declining guest numbers, profitable operation has become unattainable for an increasing number of businesses, triggering a wave of closures.
The changes apply to restaurant-type hospitality units, meaning that for confectioneries and cafés are not eligible.
Government Decree 10/2026 (I.30.) and NGM Decree 5/2026 (I.30.) introduce fundamental changes in the following four areas:
Income (value of benefits) arising from representation provided in the form of hospitality (food, beverages) in restaurants is exempt from public charges up to 1% of the annual total revenue accounted for in the tax year, but not exceeding 100 million forints. Important, based on a strict reading of the text, this exemption applies only to representation, and not to other events primarily aimed at entertainment (e.g., team-building events).
The tourism development contribution payable on services related to restaurant hospitality is reduced from 4% to 2%.
Pálinka purchased for the purpose of providing representation or non-representation hospitality, or as a business gift or low-value gift, is exempt from public charges. This applies only to products produced in a tax warehouse, purchased directly from there, and bearing a pálinka tax stamp.
The operator of a restaurant may treat up to 20% of the VAT-inclusive price of the products consumed by the guest as a service fee, even if the service fee is not indicated as such on the receipt issued to the guest. The general rate of the service charge remains 15%, but for restaurants this may be increased to 20%, and the related preferential taxation may be applied even if the service fee is not charged at this rate — or not charged at all — on the receipt.
The first three changes may already be applied from the beginning of 2026.The change concerning the service fee enters into force on 1 February 2026.
Connected links:
Tax&Bell Hungary is a professional HR and Tax advisory firm you can rely on—whether you need consulting or an audit, or you wish to outsource your HR processes.
Take advantage of our free 30minute Tax Consulting Session or HR Consulting Session, during which we assess your and your company’s real needs and provide immediately useful guidance.
Feel free to contact us: info@taxandbell.hu
