ECJ rules against tax-free exemption for pálinka distillers

EU

Now this one could hurt: The European Court of Justice made official today the long-rumored striking down of a Hungarian law exempting taxes on small-scale pálinka production. A reported 15 million liters of the national tipple could be affected.

A motion was filed against the state of Hungary in March 2013 regarding the national law, said to be the very first officially enacted after Prime Minister Viktor Orbán successfully returned to the position in 2010. While Hungary had provided a 0% tax rate for distillers of 50 liters of pálinka per annum or less, standing European Union law states that the maximum break alcohol distillers are allowed is 50% off the domestic excise-tax rate.

In mid-March of this year, local daily Magyar Nemzet broke the story of the incipient overturn with confirmation from EU sources speaking on condition of anonymity.

At that time, National Economy Minister Mihály Varga pledged in a press conference that he and his government would “defend the excise tax exemption for pálinka.”

According to government statistics, such contract distillers produced over 15 million liters of pálinka in 2013, a 1 million liter year-on-year increase; 95% of all pálinka brewed in Hungary is consumed within the country.

 

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