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European Commission tells Hungary to end telecoms tax

The European Commission on Thursday asked Hungary to abolish a tax on telecommunications companies.

"The Commission considers this tax is illegal under EU telecoms rules because revenue from the taxes is used for the Government's central budget and not for meeting the specific costs of regulating the telecoms sector," the body said.

The Commission also noted that Hungary had failed to consult with telecoms in an appropriate manner on the tax, as required.

The tax -- between 0% and 6.5% of gross revenue, excluding VAT -- was introduced in 2010 as one of three "crisis taxes" also levied on the retail and energy sectors.

The Commission's request to Hungary to abolish the tax takes the form of a "reasoned opinion" under EU infringement procedures. Hungary now has two months to inform the Commission of measures taken to comply with EU telecoms rules. If it fails to do so, the Commission may refer Hungary to the EU's Court of Justice. 

The Commission opened an infringement proceeding against Hungary concerning the tax in March 2011.

Charges by member states on telecoms may only cover certain administrative and regulatory costs. At the same time, they should be objective, transparent and proportionate and should be adjusted if appropriate. Interested parties must also be consulted in an appropriate manner of any amendments to the charges.

In March 2011, the Commission referred Spain and France to the EU's Court of Justice for levying charges on telecoms in breach of EU telecoms rules