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Hungary: Deductibility of input VAT on dual-use car rentals

Hungary: Deductibility of input VAT

Hungary’s tax authority issued supplemental information regarding the deductibility of the amount of input value added tax (VAT) related to the rental of cars that are used for both business and private purposes.


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As of 1 January 2019, 50% of the input VAT related to a car rental may be recoverable if the car has been involved in the business activity of the taxable person. The supplemental information further provides that the rented car must be involved in the business activity of the taxable person (that is, the rental must even partially be used in a taxable business activity). This requirement applies for each transaction or supply of the car rental. In practice, this means that if the lessor invoices the rental fee monthly, the usage of the car for business purposes (even if it is minimal) must be verified monthly as well.

In order to prove that the car has also been used for business purposes, any documentation (including an email) may be sufficient to prove that the rented car has been used in the ordinary course of business and must verify that the usage for business purposes has occurred on the basis of its content.

Lastly, the supplemental information is effective from the date when the new rule regarding the deductibility was effective (i.e., from the beginning of the year 2019).

Read an October 2019 report prepared by the KPMG member firm in Hungary 

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