EC begins investigation of Hungary’s ad tax
The European Commission launched a thorough investigation to determine whether Hungary's current progressive advertisement tax complies with European Union rules, Hungarian news agency MTI reported.
According to the reports, the European Commission has expressed concerns that Hungary’s progressive advertisement tax "could selectively favor certain companies and give them an unfair competitive advantage".
"A progressive tax based on turnover places larger players at a disadvantage, unlike a progressive tax based on profits, which can be justified by the higher burden-bearing capacity of very profitable companies," the EC said, adding that "at this stage, the Hungarian authorities have not presented any objective reason that would justify this."
In a separate decision, the EC said it prohibited Hungary from applying the progressive rates, in a "suspension injunction", until its assessment is finished.
The EC’s investigation gives related third parties the opportunity to comment on the advertisement tax, however the outcome of the investigation will not be affected by these comments, MTI added.
Commissioner Margrethe Vestager, in charge of competition policy, said she welcomed signals from the Hungarian government that they intend to make changes to the advertisement tax, but added that the state aid investigation would examine the changes in detail "to make sure there is no unfair discrimination against certain media companies".
Earlier, German RTL Group filed a complaint with the EU claiming that its Hungarian subsidiary RTL Klub was the only media outlet that falls into the highest bracket of the tax, which puts it in a "structurally loss-making position".
Cabinet Chief János Lázár said early in March that the government had conducted "business-like negotiations" with Germany's Bertelsmann group, RTL's owner, on the tax.
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