EU proceedings regarding Hungarian special tax go to the next round
Brussels/Salzburg – The EU Commission took another step on Wednesday in its infringement procedure against Hungary regarding a special tax targeting foreign companies. According to the Commission, the special tax restricts the EU’s freedom of establishment. The Hungarian retail tax regulation is still not in line with EU treaties. The supermarket chain Spar had urged the Commission to initiate proceedings against Hungary.
The Brussels authority opened an infringement procedure in the autumn of 2024. Although Hungary had committed to abolishing the special tax, this has not happened, the Commission argued. Hungary has continuously extended the tax without providing a clear timeline for its phasing out. Additionally, the applicable maximum tax rates have been increased.
Budapest has two months
Foreign-controlled retail companies operating in Hungary are currently subject to high and highly progressive sales tax rates. Domestic retailers are not subject to the same maximum rates. In particular, the regulation prevents foreign companies from restructuring their business operations like domestic ones, according to the Commission. Therefore, the retail tax regulation constitutes a restriction on the freedom of establishment.
The Commission has decided to send a reasoned opinion to Hungary as the next step in the infringement procedure. Budapest now has two months to respond and take the necessary measures. Otherwise, the Commission may decide to bring the case before the Court of Justice of the European Union and file a lawsuit.
Spar welcomes “clear signal”
“We welcome the reasoned opinion against the special tax. It is a clear and necessary signal to ensure the functioning of the EU internal market. At the same time, we believe that a state aid procedure should be initiated. We therefore urge the Commission to show the same determination in enforcing state aid law to maintain the effectiveness of EU law,” said Spar Austria in a statement to APA.
The Austrian retail group is the number two in the food market in Hungary, with a revenue of approximately 2.8 billion euros. The Hungarian special tax for retailers of 4.5 percent cost Spar around 75 million euros last year, according to its own statements. Last September, Spar Magyarország, the Hungarian subsidiary, achieved a partial victory before the European Court of Justice (ECJ) in Luxembourg. Price and quantity controls that Hungary introduced in 2022 for several agricultural products violate EU law, the court ruled at that time. (20.06.2025)
