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Jun 05, 2020

European Court of Justice rules in favor of Hungary on progressive taxes

The European Court of Justice has ruled in favor of Hungary against the European Commission’s decision that the progressivity of certain tax rates based on turnover was in breach of EU state aid rules.

 

The European Court of Justice has ruled in favor of Hungary against the European Commission’s decision that the progressivity of certain tax rates based on turnover was in breach of EU state aid rules.

In a procedure launched in 2015, the EC told Hungary to suspend a progressive health tax on the trade and turnover of tobacco products as well as a progressive fee for food chain inspections. The arrangement, the EC said, amounted to state aid because it helped companies with low turnover, giving them an advantage over competitors.

Hungary challenged the decision and objected to the EC’s reasoning. Hungary’s justice minister, Judit Varga, said that the real significance of the court’s decision was that it specified how the EC may order the suspension of a national law during state-aid investigation procedures. The Court of Justice of the European Union (CJEU) ruling concerns direct taxation, an important aspect of the sovereignty of EU member states, she said.