CJEU dismisses EC appeal of Hungary ad tax ruling

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The Court of Justice of the European Union (CJEU) on Tuesday dismissed an appeal by the European Commission of an earlier ruling supporting Hungary's progressive advertising tax, according to a report by state news wire MTI.

In June 2019, the CJEU annulled a decision adopted by the EC that the tax constituted state aid and was incompatible with internal market rules.

Rejecting the EC's appeal of that decision, the CJEU reaffirmed that "given the current state of harmonization of EU tax law", member states are free to establish the system of taxation "they deem most appropriate" as long as tax measures "do not entail any manifestly discriminatory element".

"In particular, EU law on State aid does not preclude, in principle, Member States from deciding to opt for progressive tax rates, intended to take account of the ability to pay of taxable persons, while nor does it require Member States to reserve the application of progressive rates only to taxes based on profits, to the exclusion of those based on turnover," the CJEU said.

Hungary's two-rate ad tax is based on revenue.

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