Digital Agenda: Commission refers Hungary to Court for failure to end special tax on telecom operators

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The European Commission has decided to refer Hungary to the EU’s Court of Justice because it continues to impose a specific tax on the turnover of telecoms operators in violation of EU rules. This tax was one element of a “crisis tax” introduced in October 2010 on three major sectors of the economy (retail commerce, telecoms and energy) to improve Hungary’s budgetary position. The Commission considers this tax to be illegal, because EU telecoms rules allow sector-specific charges only to cover the specific costs of regulating the sector, and not to generate additional revenue for the central budget. Increasing the financial burden of telecoms operators could have an impact on consumers’ bills, distort competition and impede investment in a sector expected to drive growth under the Digital Agenda.

Hungary has also failed to comply with its obligation under EU law to consult interested parties in an appropriate manner on any amendments of charges applied to telecoms operators.

The rate of the charge levied on telecom operators varies between 0% and 6.5%, on the basis of gross revenues (excluding VAT). The amount of budgetary revenue (over 200 Million euros per annum) that the tax has started to generate reinforces the distortive effects of this charge, and creates a considerable obstacle to the achievement of the Digital Agenda objectives. Here to read more.

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