ÁFAexempt

ÁFAexempt refers to goods or services that are exempt from Value Added Tax (VAT), also known in Hungary as Általános Forgalmi Adó (ÁFA). This exemption means that businesses providing these items or services do not charge VAT to their customers, nor can they reclaim VAT paid on their own purchases related to these exempt activities. The specific categories of goods and services that are ÁFAexempt are defined by Hungarian tax law.

Common examples of ÁFAexempt supplies often include certain financial services, insurance, postal services, and healthcare. In addition, educational services provided by accredited institutions and cultural services like museum admissions can also be exempt. The intention behind these exemptions is typically to support sectors deemed socially important or to avoid taxing essential services.

It is crucial for businesses to correctly identify whether their activities fall under ÁFAexempt status. Misclassification can lead to tax penalties. Businesses that are entirely ÁFAexempt are generally not required to register for VAT purposes, but they have limitations on deducting input VAT. For businesses that have both taxable and ÁFAexempt supplies, specific apportionment rules apply to determine the deductible portion of input VAT. Detailed guidance is usually available from the Hungarian Tax Authority (NAV).