Because of the financial and economic crisis of the last few years, Member States are giving greater consideration again to a traditional source of revenue: taxation. This not only takes the form of increasing the rates of existing taxes. The introduction of new kinds of tax can also be seen.
The present request for a preliminary ruling concerns such a new kind of tax. In order to cope with higher public financial requirements, for a limited period of time Hungary levied a tax which was based on the turnover of certain undertakings but was associated with a progressive rate that was unusual for such a tax. Of course, criticism of a new tax is no surprise. However, in the present case the Court will consider the question whether the criticism regarding the lawfulness of such a tax under European Union (EU) law is also justified. In this regard, taxable persons in particular claim that because of the progressive scale the tax distorts competition to the detriment of foreign undertakings. It will be necessary to clarify the extent to which such distortions of competition merely give rise to serious economic effects or are, in fact, also incompatible with EU law.
The conclusions of the Court are that articles 49 TFEU and 54 TFEU must be interpreted as precluding legislation of a Member State relating to tax on the turnover of store retail trade which obliges taxable legal persons constituting, within a group, ‘linked undertakings’ within the meaning of that legislation, to aggregate their turnover for the purpose of the application of a steeply progressive rate, and then to divide the resulting amount of tax among them in proportion to their actual turnover, if – and it is for the referring court to determine whether this is the case – the taxable persons covered by the highest band of the special tax are ‘linked’, in the majority of cases, to companies which have their registered office in another Member State.