The European Commission said on Thursday that it has referred Hungary to the Court of Justice of the European Union because it considers the country’s law on sovereignty protection to be in breach of EU law. Furthermore, the European Commission launched an infringement procedure against Hungary over a progressive turnover-based tax system for retailers that it said constituted a restriction to the freedom of establishment.
In a statement, the EC noted that the law establishes the Sovereignty Protection Office, “tasked with investigating specific activities said to be carried out in the interest of another State or a foreign body, organisation or natural person” which could violate or jeopardise Hungary’s sovereignty.
The office is also responsible for investigating organisations that use foreign funding to carry out activities that could influence the outcome of elections or the will of voters, it said.
The EC noted that it sent a letter of formal notice to Hungary, launching an infringement procedure over the law in February.
Because it considered Hungary’s response “unsatisfactory”, the EC stepped up the infringement procedure in May, “reiterating the grievances concerning the violation of the fundamental rights enshrined in the EU Charter of Fundamental Rights, the Internal Market Fundamental Freedoms, and EU Data protection legislation”, it noted.
In its response, Hungary said the sovereignty protection law was not in breach of EU law and that the commission’s concerns were unfounded, the statement said.
The EC said that after assessing Hungary’s reply, it maintained most of its concerns which, it said, had not been addressed.
It said its concerns were connected with the sovereignty protection law’s violation of several fundamental rights enshrined in the EU Charter of Fundamental Rights such as the right to respect private and family life, freedom of expression and information, freedom of association, the right to legal professional privilege and the presumption of innocence.
Breaching several fundamental freedoms
The EC said it also considered the law to be in breach of several fundamental freedoms of the internal market, the e-Commerce Directive, the Services Directive and the EU Data protection legislation.
The commission also criticised the Hungarian law for entrusting the Sovereignty Protection Office “with very broad discretion concerning investigations, notably on access to information, empowering the Office to intervene” in investigations. Further, the law “requires extensive publicity about the individual investigations and their findings”, which the EC said “will have negative consequences for the concerned entities including a stigmatising effect”.
The statement added that the “broad powers and discretion” of the Sovereignty Protection Office affected a wide range of people and organisations, including civil groups, media outlets and journalists disproportionately.
European Commission launched another infringement procedure
Supermarket chain SPAR has launched “another political attack against Hungary with Brussels on its side”, the National Economy Ministry said on Thursday.
The ministry issued the statement after the European Commission launched an infringement procedure against Hungary over a progressive turnover-based tax system for retailers that it said constituted a restriction to the freedom of establishment.
The ministry said Hungary’s sectoral tax on retailers had come under attack again, in spite of the Court of Justice of the European Union’s position, in a ruling in 2020, that it was in line with EU norms.
“This measure was attacked once and we defended it, and we’ll defend it now, too,” it added.
The ministry noted that the CJEU had ruled earlier that member states were free to decide on the taxation system that best fit their needs, including progressive taxation based on turnover.
With its latest decision, the EC has “taken the side of price-gouging, profit-hungry SPAR instead of families”, the ministry said.
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