The Government is committed to retaining the current rules regarding the advertisement tax, and will do everything in order to protect this innovative Hungarian initiative which allows the state budget to collect the taxes that are due from global businesses engaged in advertising activities.

The European Commission declared the progressive rates of the advertisement tax incompatible with EU law today, and additionally ordered the elimination of the selective business advantages that are presumed to stem from the system. The Brussels body objected to the fact that businesses whose net sales revenue derived from the publishing of advertisements does not reach HUF 100 million are not required to pay any advertisement tax due to the minimisation of the administrative costs related to taxation.

The Commission’s decision is contrary to EU law. The progressive rates of the advertisement tax are not in violation of the state aid rules because businesses in the same position, or in other words, businesses with the same sales revenues are required to pay the same amount of tax. Consequently, the rules in question cannot be selective as a matter of course, and cannot result in state aid. Several relevant rulings of the European Court, too, confirm this.

The Commission’s decision does not only stand in violation of the Member States’ tax sovereignty and EU law, but is also discriminatory against Hungary, given that the Brussels body does not find objectionable advertising tax regulations in other Member States which differentiate on account of the different advertisement publishing methods.

Hungary will not retroactively impose taxes of any kind on small businesses which enjoy exemption from the payment of the advertisement tax even at Brussels’ request. The Hungarian Government will not allow global digital businesses which obtain significant revenues from advertising activities to avoid the obligation of paying taxes, thereby wronging the Hungarian state budget.

(Ministry for National Economy)