The possibility of cutting VAT for domestic hotels has been a recurring issue and the topic emerged again at a recent industry meeting with key market participants.

Decreasing the VAT rate from the current 18% could be possibly considered a tool to improve the profitability of hotels, the Hungarian Tourism Agency (Magyar Turisztikai Ügynökség - MTÜ) said at a previous general meeting of the Association of Hungarian Hotels and Restaurants (Magyar Szállodák és Éttermek Szövetsége - MSZÉSZ) last fall.

But it is still a question whether the VAT cut could go through after all and MTÜ has emphasized that hotels should be also working to increase their efficiency to increase profitability.

The hotel industry has been lobbying for a VAT cut since a similar decrease was introduced in the hospitality sector. Restaurants are already subject to a lower VAT rate, but they have to pay a 4% tourism development contribution.

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