Hungary Reduces VAT on Prescription Medicines to 0%

‍What Changed for VAT on Medicines in Hungary?

Under Act XL of 2026, the VAT rate applicable to certain human medicines has been reduced from the previous 5% reduced rate to 0%, effective 1 September 2026.

Shortly after publication, the National Tax and Customs Administration (NAV), together with the Ministry of Finance, issued official guidance clarifying which products qualify for the new 0% rate and how businesses should apply it in practice.

Which Products Qualify for the 0% VAT Rate?

The 0% rate applies specifically to:

• Prescription-only human medicines — products classified, under their marketing authorization, as subject to a medical prescription.

• Magistral preparations for human use — medicines compounded by pharmacists in pharmacies according to the Hungarian or European Pharmacopoeia, or the Collection of Standard Prescription Formulas (FoNo).

The 0% rate also extends to the preparation fee charged for magistral products, since this is treated as an ancillary cost of the supply.

As a technical consequence of the change, medical radioactive isotopes and medicinal oxygen — previously listed separately in the VAT Act at the 5% rate — have been removed from that separate listing, since they already qualify as prescription-only medicines and therefore now fall under the 0% rate as well.

What Is Excluded From the 0% Rate?

Not every medicine sold in a Hungarian pharmacy benefits from the change:

• Over-the-counter (OTC) medicines remain at 5%, even when a doctor issues a prescription for them solely to allow the patient to access social security (health insurance) reimbursement. The determining factor is the product's official classification, not whether a prescription was actually issued.

• Cosmetic and veterinary magistral preparations continue to be taxed at the standard 27% rate — Hungary's standard VAT rate remains the highest in the EU.

Does the 0% Rate Apply to Wholesale and Retail Sales?

Yes. The 0% rate applies to both wholesale and retail sales of qualifying prescription medicines. In the case of online retail, only non-prescription, non-reimbursed products can legally be sold, so these fall outside the scope of the 0% rate by definition.

Why Is Hungary Cutting VAT on Medicines?

Prime Minister Péter Magyar announced the prescription-drug VAT cut on 23 July 2026, alongside separate plans to reduce VAT on selected foodstuffs and firewood — part of a wider series of VAT rate reductions rolled out by Hungary's government since it took office in May 2026. According to the government's announcement, the measure is expected to reduce budget revenue by approximately HUF 2 billion for the remainder of 2026, a cost officials have framed as justified by the benefit to patients, particularly the elderly and people managing chronic conditions, in a country where out-of-pocket healthcare spending remains above the EU average.

Take a look at our overview of VAT rates in Europe.

Looking Ahead

Businesses selling pharmaceuticals in Hungary — including pharmacies, wholesalers, and other suppliers of prescription medicines — should review their product classifications, billing systems, and invoicing templates to correctly apply the new 0% rate to qualifying transactions from 1 September 2026 onward, while continuing to apply the 5% rate to OTC products and 27% to cosmetic or veterinary magistral preparations.

At Marosa, we are closely monitoring further VAT rate developments in Hungary, including the government's announced plans to extend reduced rates to other essential goods.