Hungary: “Special taxes” on telecommunications, retail sectors upheld (CJEU judgment)

Hungary: “Special taxes” on telecommunications, retail

The Court of Justice of the European Union (CJEU) today issued a judgment concluding that the “special taxes” imposed in Hungary on the turnover of telecommunications operators and undertakings in the retail trade sector are compatible with EU law—specifically, the Hungarian special taxes were found to be compatible with the principle of freedom of establishment and the EC directive on value added tax (VAT) (Directive 2006/112).


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According to a related CJEU release [PDF 251 KB]:

  • Application of these special taxes to turnover is progressive (and steeply progressive in the case of the taxes imposed on the retail trade sector).
  • The special taxes are mainly borne by undertakings owned by persons of other EU Member States.
  • The fact that the subject undertakings achieve the highest turnover in the Hungarian markets reflects the economic reality of those markets and does not constitute discrimination against those undertakings.
  • Since the tax imposed on telecommunications operators does not have all the essential characteristics of VAT; that tax cannot be treated as comparable to VAT; and that tax does not jeopardize the functioning of the VAT system of the European Union.

The cases are: Vodafone Magyarország Mobil Távközlési Zrt. (C-75/18) and Tesco-Global Áruházak Zrt. v Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (C-323/18) (3 March 2020)

The CJEU judgment provides an interpretation of EU law; the judgment does not decide the dispute. Rather, it is now for the Hungarian court to dispose of the case in accordance with the CJEU judgment.

Read a March 2020 report prepared by KPMG’s EU Tax Centre

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