EU court: Hungary’s sectoral taxes compatible with EU law

Hungarian special taxes on the turnover of telecommunications and retail companies were compatible with EU law, the Luxembourg court said in a ruling on Tuesday.

Following the financial crisis of 2008, Hungary introduced the sectoral taxes to counteract imbalances in the public finances.

Tesco and Vodafone Hungary disputed the justification for the special taxes.

The European Court of Justice ruled that there was no discrimination against the companies, since the special taxes that mainly impacted foreign-owned companies with the highest revenues on the Hungarian markets were progressive and reflected the real economic situation on the market.

• Hungarian parliament suspends compensation payments to prisoners

The Finance Ministry said in reaction that Tuesday’s court rulings would prevent large companies from raising complaints in the future against paying proportionally more tax than small companies with significantly lower economic potential. The EU court has acknowledged the Hungarian government’s position concerning the fair sharing of burdens, the statement added.

Commenting on the ECJ’s rulings, Justice Minister Judit Varga said that progressive special taxes do not constitute discrimination if they are proportionate with the companies’ positions on the market.

Varga said the ruling against Google Ireland, which had turned to the court to annul a fine of the Hungarian tax authority which they said was discriminative, showed that not even international corporations can evade taxation.