Court rules in favour of Budapest council in lawsuit over solidarity tax

A Budapest court has issued a binding ruling in favour of the city’s administration in its lawsuit against the state treasury over the solidarity tax, declaring the previous tax collection orders unlawful.

The Budapest metropolitan council filed its lawsuit in 2023 arguing that the 28 billion forints (EUR 67.9m) in solidarity tax it had paid to the state treasury was unlawful because it exceeded the funding it received from the government. The state treasury had previously argued that the case only concerned its Pest County organisation, but the Budapest Municipal Court disagreed, saying the tax collection orders were issued and the treasury sent the related letters. The court annulled the treasury’s letters on the payment orders on the grounds that they were “non-existent administrative acts that suffer from fundamental formal legal deficiencies”.

Commenting on the ruling, Budapest Mayor Gergely Karácsony said the court had made it clear that the state treasury had “unlawfully” charged the metropolitan council’s account.
He told a press conference that the treasury had to transfer 28.3 billion forints plus interest to the city council, otherwise they will take legal action. He noted that another lawsuit was pending on the 40 billion forints in solidarity tax that the city council paid in 2024, but there was “no doubt” after Tuesday’s ruling that the court would issue the same decision.

The Prime Minister’s Office said Karacsony was misleading the public with his remarks on the ruling, arguing that under the court’s decision, Budapest still had an obligation to pay the solidarity tax, which the state had collected from the metropolitan council. The office said the court had not ruled that the state had to pay back the tax, adding that it had merely pointed out a procedural error on the treasury’s part, which the treasury had corrected.

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