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VAT cut ‘could save Hungarian live sector’

The Hungarian government is being urged to reduce VAT on tickets to a flat 5% to support the struggling live music industry

By IQ on 17 Nov 2020

PwC's Dávid Szilágyi speaks at the Music Hungary Conference

PwC's Dávid Szilágyi speaks at the Music Hungary Conference


The Hungarian live music business is calling on the government to support the industry by slashing the sky-high VAT levied on concert and festival tickets.

Currently, value-added tax is charged at 27% on concert and 18% on festival tickets in Hungary. According to a new report by PricewaterhouseCoopers (PwC), the Hungarian government could give the industry – whose revenues are 10% what they were in 2019 – a shot in the arm, and make it more “crisis resistant” in future, by cutting VAT to a uniform 5%.

The report – funded by Music Hungary, Sziget festival, promoter InConcert, the Hungarian Festival Association (Magyar Fesztivál Szövetség) and the Association of Music Managers (Zenei Managerek Szövetsége), among others – was presented at Music Hungary’s annual conference, held on 9 and 10 November, days before Hungary went into a second lockdown.

In 2019, the Hungarian live industry was worth an estimated 45 billion Ft (€125 million) by net ticket sales. PwC’s analysis shows that a reduction in VAT to to 5% would provide the Hungarian music industry with an additional 6.7bn Ft annually, the tax cut more than paying for itself by stimulating increased ticket sales.

“A reduction in the VAT rate would have a positive impact on all players in the sector”

According to Dávid Szilágyi, chief analyst of PwC Hungary, the current rate of VAT also makes it difficult for promoters to afford foreign performers.

According to Music Hungary, the Hungarian music industry has received next to no aid throughout the coronavirus crisis, with just €23.5 million finding its way to the sector since March. Of that, €14m went to poorly received government-sponsored ‘warehouse concerts’ (raktár koncertek) held behind closed doors since August.

“Our research highlights the economic and cultural significance of concerts and festivals, and also emphasises that a reduction in the VAT rate would have a positive impact on all players in the sector,” concludes the PwC report.

In October, IQ partnered with Hungarian Oncoming Tunes (Hots), the Hungarian music export office, to showcase the best of Hungary’s resilient live music scene.

 


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