After Hungary and Slovakia won the battle against the European Union for tax-free home brewing of their favorite fruit brandy, known as pálinka, Hungary’s parliament is expected to vote soon on amending the country’s tax law, allowing Hungarians to distill up to 50 liters per household from 2021, news portal Origo reports.
“The government decided it will implement the favorable legislation as of Jan. 1, 2021, meaning that from that time there will be no more need for the distillate stamp,” Adnrás Tállai, state minister at the Finance Ministry told national news agency MTI on Sunday.
After its election victory in 2010, Hungary’s ruling conservative Fidesz legalized small home distilleries in 2010, but could not entirely make good on its election promise of free home brewing due to EU regulations. Home distillers still had to purchase “distillate stamps” costing 700 forints (€2) per liter.
After a long fight, Hungary and Slovakia finally won the “free pálinka” battle on July 29, when the European Union issued directive 2020/1151 giving full tax exemption to distillate “that is consumed by a private individual, the members of his family or his guests, provided that no sale is involved”, which has to be “produced by that private individual from fruits owned, grown and supplied by that private individual from a plot of land to which that private individual holds a title”.
Pálinka, distilled from every imaginable fermented fruit from plums to elder, originates from the Carpathian Basin and is also known as pálenka in Western Slavic languages and pălincă in Romanian. All share the Slavonic root paliti, which means to burn or to distill.
The first written record of pálinka goes back to 1332 as being the drink of King Charles I of Hungary and Croatia. It is said he and his wife — both suffering from arthritis — drank it for its medicinal qualities.
The victory, however, will put industrial producers in an even worse situation than they are already experiencing. As a result of the distillate stamps, last year commercial producers only sold 1.16 million liters of pálinka in Hungary, compared with 2.8 million liters in 2018.
That reduction was the result of the combined effect of cheaper home brewing and a 2019 additional health tax of 1,100 forints per liter on alcoholic beverages with an alcohol grade of 45 percent and above.
