The Court of Justice of the European Union has ruled that the special taxes levied in Hungary on the turnover of telecommunications operators and of undertakings in the retail trade sector are compatible with EU law.
In a statement passing judgment on cases involving Vodafone and – in the case of the retail trade sector Tesco – the court said that the special taxes are compatible with the VAT Directive.
It added that “the fact that those special taxes, the application of which to turnover is progressive (and steeply progressive in the case of the latter), are mainly borne by undertakings owned by persons of other Member States, due to the fact that those undertakings achieve the highest turnover in the Hungarian markets concerned, reflects the economic reality of those markets and does not constitute discrimination against those undertakings”.
The court also held that “since the tax imposed on the telecommunications operators does not have all the essential characteristics of VAT, that tax cannot be treated as comparable to VAT, and consequently that tax does not jeopardise the functioning of the VAT system of the European Union and, therefore, is compatible with the VAT Directive”.
The full judgement can be found here.
