EU Courts Chides Hungary Over Google Ad Tax Penalties

(Bloomberg) --

Google won the European Union’s top court backing in a clash with Hungary over penalties linked to a local advertising tax.

Hungary imposed a system of penalties for foreign companies that was “disproportionate and therefore unjustified,” the Luxembourg-based court said in a decision on Tuesday.

While the bloc’s rules don’t prevent a member nation from forcing advertising service providers to submit a tax declaration, even if they’re based in another EU country, Hungary went too far with a system of higher penalties for foreign companies in case of non-compliance.

“The system of penalties relating to the Hungarian tax on advertising is not compatible with EU law,” the EU Court of Justice said in a binding decision Tuesday in a dispute involving Google’s Ireland unit.

Google brought the case in Hungary after receiving a series of fines, within days of each other, amounting to a maximum of 1 billion forint ($3.3 million) over failures to comply with the law.

The case is: C-482/18, Google Ireland.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Zoltan Simon

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