EU - Hungary Faces Uncertainty in Advancing VAT in Digital Age Package Amid EU Presidency Transition

During its Presidency of the Council of the EU, Belgium made considerable efforts to adopt the VAT in Digital Age (ViDA) package. However, these efforts did not contribute to a positive outcome and transferred responsibility for finding a solution to Hungary, which took over the presidency on July 1, 2024.

Hungary published a Program presenting its leading ideas and plans for taking over the presidency, including those on taxation and customs issues.

ViDA and the Hungarian Presidency Program

In the part of the program regarding taxation and customs issues, the Hungarian program states that the objective is to effectively move forward the discussions on current taxation files and international matters, making progress that addresses the needs arising from new business models, international cooperation, and fiscal revenues.

Further, it highlights that tax evasion, ensuring legal certainty for taxpayers, and supporting the EU's international involvement are key priorities. Interestingly, contrary to the Digital Services Act, the Digital Markets Act, and the AI Act mentioned in the Digitalisation part of the Program, ViDA is not mentioned in any part of the Program.

While presenting the Presidency work program, the Hungarian Minister of Finance (MoF), Mihály Varga, at the ECOFIN meeting on July 16, 2024, stated that the Hungarian presidency will strive to reach an agreement on the ViDA package. The Hungarian MoF added that ViDA is an important piece of legislation since it builds on the increased use of digital solutions, enabling businesses to comply more easily with tax laws and strengthening the tax administration's control capabilities.

However, since the presidency program does not mention ViDA, the question of whether ViDA is a priority for the Hungarian Presidency is raised.

Conclusion

It is reasonable to believe that ViDA will be discussed at future ECOFIN meetings. Digitalization is an important part of the Hungarian Presidency program, and ViDA should be considered part of the EU digitalization process. 

However, Hungary's efforts to reach a final agreement on this package remain to be seen. Given the current political climate in the EU and other issues being prioritized, the future of ViDA remains questionable.

Source: Program of the Hungarian Presidency of the Council of the EU, European Tax Advisor Federation, Council of the European Union