RTL Group has issued a first assessment of the financial impacts of Hungary’s controversial new ad tax law, which is expected to become effective, and require the first payments by RTL Hungary, this August.
Based on the amended act, it says that RTL Group’s tax charge would increase by approximately €15 million on a full-year basis.
In 2013, RTL Hungary generated an EBITA of €15 million on revenue of €100 million.
RTL Group adds that as part of the normal closing process, it will also perform an impairment test on the goodwill of RTL Hungary for the Group’s 2014 half-year results.
Given the size of the new ad tax, it expects to have to record an impairment in its 2014 interim financial statements.
The amount of this impairment is currently being assessed, and the results of this impairment test will be disclosed on August 21, 2014, alongside RTL Group’s 2014 half-year results.
In a joint statement, Anke Schäferkordt and Guillaume de Posch, Co-CEOs of RTL Group, said: “Operationally, RTL Group continues to perform strongly in 2014. However, our first assessment shows the severe impact of the new advertising tax in Hungary: it will force RTL Hungary in a structurally loss-making position and will also reduce RTL Group’s net profit in 2014. Since 1997, RTL Group has consistently built up a very valuable asset in Hungary, employing more than 350 people and investing in local entertainment and independent news reporting. And we have paid significant amounts of taxes in Hungary. We are determined to pursue all options to protect our asset against this confiscatory tax. Our announcement today sends an alarming signal for all international investors in Hungary. We thus call on the Hungarian government, again, to revise this counter-productive tax policy seemingly specifically aiming at RTL, as it undermines its operations and raises major concerns about the freedom of journalism in Hungary.”
RTL Hungary will be liable to pay the top 40% levy imposed on its ad revenue in Hungary, which currently amounts to around €65 million.
