Sunday, 27 November 2016

European Commission finds Hungarian advertisement tax breaches EU law

The European Commission announced on 4 November 2016 that it has concluded that Hungary’s advertisement tax violates EU law.
Under Hungary’s 2014 Advertisement Tax Act, companies were taxed at a rate depending on their advertisement turnover, and companies with a higher advertisement turnover were subject to a significantly higher tax rate.
In March 2015, the commission opened an in-depth investigation into whether the tax complied with EU state aid rules. The commission now has concluded that it did not.
Because of the progressive rates in the 2014 act, companies with a low advertisement turnover were liable to pay substantially less advertisement tax, even in proportion to their advertisement turnover, than companies with a higher
advertisement turnover. This gave companies with a low turnover an unfair economic advantage over competitors.
When the commission opened the investigation, it also asked Hungary to suspend the application of the tax. Hungary suspended the tax but implemented an amended version, without notifying it to or consulting the commission. The
investigation by the commission showed that the amended advertisement tax, in effect since July 2015, did not fully address the commission’s concerns. The commission’s decision requires Hungary to remove the unjustified discrimination between companies under both the 2014 Advertisement Tax Act and the amended version.
Source: Deloitte