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CJEU rules Hungary sectoral taxes compatible with EU rules

The Court of Justice of the European Union (CJEU) on Tuesday ruled that progressive, turnover-based taxes on retailers and telcos in Hungary are compatible with European Union rules, state news wire MTI reports.

The local units of the U.K.ʼs Tesco supermarket chain and telco Vodafone had argued in separate cases that the progressive taxes unfairly target foreign-owned businesses, but the CJEUʼs judges said the fact the taxes hit foreign-owned companies the hardest accurately reflects the makeup of the local market, thus they are not discriminatory.

For retailers, the tax rate is 0.1% of annual net revenue between HUF 500 million and HUF 30 billion, 0.4% of revenue between HUF 30 bln and HUF 100 bln, and 2.5% of revenue over HUF 100 bln. The rate for annual net turnover of under HUF 500 mln is 0%.

Tescoʼs Hungarian unit had net sales revenue of HUF 622 bln in its 2018/2019 business year, public records show.

For telcos, the tax rate is 2.5% of annual net revenue between 100 mln and HUF 500 mln, 4.5% of revenue between HUF 500 mln and HUF 5 bln, and 6.5% of revenue over HUF 5 bln. Revenue under HUF 100 mln is taxed at a rate of 0%.

The local unit of Vodafone had net sales revenue of close to HUF 193 bln in its 2018/2019 business year, public records show.