According to the judgment passed by the Court of Justice of the European Union on Tuesday, the Hungarian government did not contravene EU law when it levied special taxes on telecommunications businesses and retailers after 2010, the Justice Minister told the Hungarian news agency MTI.

Judit Varga said the Luxembourg-based court accepted the government’s position that multinational companies with higher revenues should proportionately pay more in taxes. She recalled that in 2010, as part of the crisis management measures adopted after the Gyurcsány era, the government introduced special taxes for businesses active in telecommunications and retail in order to stabilise “Hungarian state finances very nearly bankrupted by the Gyurcsány and Bajnai Governments”.

The principle behind the special taxes lies in the mutual bearing of burdens; the government imposed these taxes not on the Hungarian people, but on multinational and large companies, the Justice Minister said.

She highlighted that while earlier the European Commission had sided with large companies, according to the Tuesday Luxembourg judgment the Hungarian government did not contravene EU law with the introduction of the special taxes because it does not constitute discrimination against these businesses if the special taxes are levied on their sales revenues progressively – primarily in the case of businesses owned by individuals originating from other Member States – and this reflects the actual economic situation of markets.

In its judgments passed in the cases of Vodafone Hungary and Tesco-Global Áruházak, the Luxemburg-based court ruled that the special taxes levied in Hungary on the sales revenues of telecommunications businesses and businesses engaged in retail activities are compatible with the freedom of establishment and the Value Added Tax Directive, she added.

Ms. Varga also said the court ruled in its judgment adopted in the case of Google Ireland that even large international digital companies such as Google cannot avoid the obligation of paying taxes. According to the court, if a Member State subjects advertising providers residing in another Member State to an obligation to submit tax declarations in respect of their advertising tax payment liabilities, it is not contrary to the freedom to provide services. In actual fact, non-compliance with the obligation to submit tax declarations can be penalised. This will also be scrutinised by the Justice Ministry’s digital freedom commission formed on Monday, the Minister said.

(MTI)