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ECJ: Hungarian retail tax may violate directive

Banking

Two days after European Commissioner for Transport Siim Kallas described Hungary’s just-introduced toll system for trucks and tractor-trailers as “not in line with European Union directives on several points,” a European Court of Justice opinion this week took aim at the government’s tax on retail operations.

In case C-385/12, pitting Székesfehérvár-based sporting goods retailer Hervis Kft against the Hungarian Tax Authority (NAV), European Court of Justice (ECJ) advocate-general Juliane Kokott judged that the sector tax enacted in 2010 may be in violation of the EU VAT directive, which prohibits a member state’s central government from levying taxes on turnover.

While “the Hungarian special tax applicable to the retail trade does not discriminate against foreign undertakings,” Kokott wrote, the special tax may nevertheless infringe the directive.

The opinion has no binding legal effect.

Hungary-based retailers with annual revenue of over HUF 500 million are required to pay 0.1% to 2.5% in additional tax, based on revenue; only those enterprises with turnover exceeding HUF 100 billion are required to pay this top rate, with Hervis’s legal representation arguing the tax to be retrogressive.

Earlier in the week, European Commissioner for Transport Siim Kallas issued a statement describing Hungary’s just-introduced toll system for trucks and tractor-trailers as “not in line with European Union directives on several points,” as quoted in local daily Népszabadság, and are in violation of European Union law”; Kallas’s objections were later confirmed to news service MTI by Spokesperson Helen Kearns.

Though the National Development Ministry reported to the newspaper that Kallas’s concerns would be studied, the statement is currently being considered “an attack.” No word yet on how the powers-that-be are taking the less-definitive ECJ opinion…

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