EC opens investigation on Hungary ad tax

Budapest, March 12 (MTI) – The European Commission on Thursday said it opened an in-depth investigation to determine whether Hungary’s tax on advertisements complied with European Union rules on state aid.

The EC expressed concerns that the progressive tax “could selectively favour certain companies and give them an unfair competitive advantage”.

Hungary introduced the progressive tax, with rates ranging from 0 to 50 percent, in June 2014.

“A progressive tax based on turnover places larger players at a disadvantage, unlike a progressive tax based on profits, which can be justified by the higher burden-bearing capacity of very profitable companies,” the EC said.

“At this stage, the Hungarian authorities have not presented any objective reason that would justify this,” it added.

In a separate decision, the EC said it prohibited Hungary from applying the progressive rates, in a “suspension injunction”, until its assessment is finished.

The opening of an in-depth investigation gives interested third parties the opportunity to comment and does not prejudge the outcome of the investigation, the EC noted.