In a landmark ruling issued on March 3, the European Court of Justice (ECJ) dismissed British retail chain Tesco’s complaint that a previous extra tax levied against it by Hungary in 2010 was against European Union guidelines.
The Luxembourg-based court told Magyar Nemzet that, according to the ruling, the additional tax on large multinationals is compatible with EU law.
The case goes back to 2010 when the conservative Fidesz won the legislative elections and came to power in May,
At the time, Hungary was struggling with a huge budget deficit, mounting public debt, high unemployment, and a stagnating economy. In order to fill at least part of the gaps in the budget, the government levied progressive extra taxes on the companies with the biggest revenues in the retail, energy, banking, and telecommunications sector in October 2010, which remained in effect until the end of the budget year in 2012.
Over the two years and two months, total budget revenues from this tax amounted to 489 billion forints (€1.45 billion at current exchange rates).
Tesco argued that by levying the tax only on the companies with the biggest revenues, the Hungarian state was in fact shielding smaller domestic retail chains but punishing the biggest ones.
The company sought the reimbursement of about 40 percent of the taxes it paid between 2010 and 2013. Another British company, telecommunications giant Vodafone, also challenged the tax back in 2018.
Tesco reacted to the news with a statement saying that the company takes tax payments seriously but is unable to comment on ongoing court cases.
The ECJ ruling will affect the outcome of a separate complaint filed by Tesco in a Hungarian court. Vodafone, in turn, said that while it contested the legality of the tax, it paid all its dues to the Hungarian state.
In separate news, Tesco Hungary’s home delivery service significantly reduced the limit of individual products that can be ordered to six from 24.
Asked by the press whether this was in response to hoarding in fear of a coronavirus quarantine in the country, Tesco only replied that “the continuous supply of clients is paramount for the company”.
Title image: Tesco truck in Hungary (source: Tesco Hungary’s Facebook page)