EC to launch infringement procedure against Hungary over excise duty on spirits

The European Commission (EC) will launch an infringement procedure against Hungary because of excise duty regulations on spirits, an EC source, who did not wish to be identified, told journalists on Thursday. The source said that the Commission views two different excise duty rate on spirits is in breach of EU law. Hungary uses two excise duty rates, depending on the acohol content of the product. EU legislation sets, however, a minimum for the rate but requires member states to use only one rate. The Commission had already refered Hungary to the European Court of Justice in February this year for exempting “palinka,” the national "eau de vie," from excise tax under certain conditions. The Hungarian government said at the time that it has no plans to tighten regulations of home distilling, and is prepared to defend its stand before the European Court. Legislation in force since the autumn of 2010 allows Hungarian households to distill for personal consumption the equivalent of 50 liters of 86%-alcohol palinka a year tax-free. An EU directive that allows, however, only a 50% reduction on the normal excise rate for such distillates.