Until now, prescription pharmaceuticals in Hungary have been taxed at the reduced 5% VAT bracket — compared to the standard 27% national rate.

Eliminating the tax entirely is designed to make essential therapies more affordable for households, particularly elderly residents, low-income families, and patients managing long-term chronic conditions.

Govt submits bill eliminating VAT on prescription meds

The government has submitted a bill to lawmakers that would reduce the VAT rate on prescription medicines from 5pc to zero.

If approved, the measure would enter force on September 1.

Prime Minister Peter Magyar announced the cut late in July. It is expected to reduce budget revenue by an annual HUF 7bn, and HUF 2bn in 2026.

Health Impact: Alleviating Household Strain for Chronic Care

In Hungary, out-of-pocket health spending remains notably above the European Union average, with pharmaceutical purchases consistently making up the largest single share of patient healthcare expenditures.

For individuals suffering from chronic non-communicable diseases — such as cardiovascular disorders, hypertension, diabetes, and oncological conditions — monthly medication costs present a continuous financial burden.

Public health experts and healthcare advocates note that medication non-adherence — where patients skip doses, split pills, or leave prescriptions unfilled due to cost—is a primary contributor to preventable hospitalizations and complications. Lowering end-user prices by removing the 5% VAT is expected to improve medication compliance, leading to better long-term health outcomes for high-risk patient groups.

Fiscal Impact: A HUF 7 Billion Impact on the Central Budget

While the tax cut directly benefits consumers at the pharmacy counter, it also carries a tangible fiscal footprint. The Ministry of Finance estimates that eliminating the VAT on prescription drugs will result in a HUF 7 billion (approx. $22 million) revenue loss to the central state budget.

Government representatives acknowledged the fiscal cost but emphasized that the revenue shortfall is a worthwhile trade-off to protect household budgets against broader inflationary pressures.

Officials noted that while additional proposed measures — such as potential VAT adjustments on heating wood and basic foodstuffs — will carry significantly larger budgetary impacts, the HUF 7 billion prescription relief can be comfortably absorbed within the current fiscal framework.

Photo: Pixabay

Source: MTI – Hungary’s national news agency since 1881.

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