Vestager Tax Crusade Stutters as Hungary Wins EU Court Clash
Hungary Wins Appeal of EU Order Calling Its Ad Tax Illegal
(Bloomberg) -- Hungary won a court fight with European Union regulators over a tax on advertising, in another setback for Competition Commissioner Margrethe Vestager’s crusade against nations she says are gaming state aid-rules to give select companies an unfair advantage over rivals.
Vestager’s officials at the European Commission failed to show that the Hungarian tax was discriminatory, the EU General Court, the bloc’s second-highest tribunal, ruled on Thursday.
Hungarian Prime Minister Viktor Orban initially levied the ad tax in 2016 by slapping a rate of as high as 50% of sales for the biggest networks, which RTL Klub, the country’s most-watched commercial TV channel, called a “brute attempt to ruin” one of the last independent media outlets. Following EU criticism, Hungary capped and gradually lowered the tax rate before pledging earlier this year to suspend it altogether through 2022.
The decision is another court loss for Vestager, the EU’s antitrust chief, who has led a crackdown on how governments choose to tax large businesses. Her targets have included several U.S. companies, such as Google and Apple Inc., prompting U.S. President Donald Trump to say that “she hates the United States.”
“The commission will be studying the judgment carefully before deciding on any next steps,” EU spokesman Ricardo Cardoso told journalists at a regular briefing in Brussels.
EU courts earlier this year overturned an order for Belgium to reclaim about 800 million euros from 35 companies, including Anheuser-Busch InBev NV. Other defeats include cases concerning Real Madrid’s allegedly unfair subsidies from a land deal with authorities in the Spanish soccer giant’s home town and a tax on the retail sector in Poland labeled as illegal state aid.
Several court tests for the EU regulator are due to come in the near future as judges start issuing decisions on Starbucks Corp.’s Dutch tax deal and weigh Apple’s fight against a massive back tax repayment to Ireland.
Read More: Hungary Must Fix ‘Discriminatory’ Tax on Advertisers, EU Warns
The commission in November 2016 said the law was illegal because of its progressive tax rates, which unfairly benefit some companies over others.
--With assistance from Marine Strauss and Zoltan Simon.
To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net;Aoife White in Brussels at awhite62@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman
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