CJEU advocate says Hungary telco tax compatible with EU rules

Issues

An advocate general of the Court of Justice of the European Union (CJEU) has said in an opinion that Hungaryʼs telecommunications sector tax does not violate European Union rules, according to a report by Hungarian news agency MTI.

The opinion was issued in response to a request for a preliminary ruling from the Budapest Administrative and Labor Court in a case involving Vodafone Hungary.

German Advocate General Juliane Kokott said the direct, revenue-based sectoral tax does not violate the directive on the common system of value-added tax and is in line with the principle of freedom of establishment. Furthermore, she added, the tax provides no selective advantage to companies with lower revenue that would be incompatible with rules on state support. 

"Different taxation arising from a progressive rate does not constitute an indirect restriction of freedom of establishment," said Kokott. "This applies even where, in the case of turnover-based income taxation, larger undertakings are taxed more heavily and they are owned de facto predominantly by foreign shareholders. The situation could be different only if conduct constituting an abuse of rights can be proven in respect of the Member State. That is not the case here," she added. 

The opinion is not binding on the court, stressed MTI.

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