EU slams revised Hungarian telecoms tax

25 Jan 2013

The European Commission (EC) has reportedly launched a formal challenge to Budapest’s revamped tax on phone calls and SMS messages, saying it breaches European Union (EU) law, Reuters reports. The EU has written to the Hungarian government giving it formal notice of its intention to commence a second infringement proceeding against the country’s telecoms tax regime, EC spokesman Ryan Heath said. The ruling on the EC’s previous objection to Hungary’s special telecoms tax is currently pending a decision from the European Court of Justice, and should Budapest lose that case, it could be required to pay back about HUF180 billion (USD814.9 million) collected in special taxes between 2010 and 2012.

Mr Heath went on to say that the special tax violated an EC requirement which rules that any ‘administrative charge be proportionate to the state’s costs in running the system’. However, the Hungarian government maintains its position that this ruling does not apply, as the levy it imposed is in the form of a tax – not an administrative charge. The ministry of economy issued a statement saying it will not modify the country’s tax law, and argues that the measure is compliant with EU rules. As such, it is ready to defend itself against any infringement proceeding.

The Magyar government has been struggling to contain its budget deficit within EU parameters (i.e. 3 % of gross domestic product), and its 2013 budget forecasts collecting up to HUF44 billion through the latest tax – which replaced the controversial telecom special tax in a flurry of measures wheeled out by Budapest in May 2012.

Hungary,

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