The government has won another special tax lawsuit in the European Court of Justice

The European Court of Justice today announced its second-instance judgment in a joint lawsuit of two Hungarian special taxes. In this lawsuit, the Hungarian government attacked that one of the bodies of the European Union (the European Commission) suspended the so-called food chain supervision fee and the health contribution of tobacco companies. The court now ruled that it was illegal to suspend the two special taxes. With these two cases, the government won four consecutive wins in special debt cases before the European Court of Justice, as in early March, the government was also justified in special retail tax cases.

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At the end of 2014, parliament passed two laws that imposed a significant special tax on retailers and tobacco companies from the beginning of 2015, with band-rising tax rates of up to 6% and 4.5% of sales, respectively. In March and April 2015, the European Commission received formal complaints about both taxes, presumably from the traders and tobacco companies involved.

The European Commission launched an inquiry into the complaints and in July 2015 suspended both special taxes. According to the Commission, the two taxes impose a disproportionate burden on larger operators, who are typically foreign-owned. The tax thus provides an illegal competitive advantage and prohibited state aid to typically Hungarian-owned companies operating in several smaller companies. The European Commission also issued final decisions in July 2016 stating that these special taxes were in breach of EU law.
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