The Commission has opened an in-depth investigation into whether Hungarian advertisement tax complies with EU state aid rules. The Commission has also taken a “suspension injunction” against Hungary, on the basis that progressive tax rates could selectively favour certain companies, thereby creating an unfair advantage. This injunction prevents Hungary from applying such rates until the Commission has reached a final decision on the matter.

2014 saw the introduction of Hungarian advertisement tax, a tax on advertisements published in the Hungarian media and applicable to all media companies, whereby the applicable rate of tax depends on turnover. The tax rates range from 0% to 50%. Companies with a higher rate of turnover attract a higher rate of advertisement tax. The tax for each company is based on the turnover from advertisement activities, without deduction of any costs.

The Commission are of the view that such progressivity in tax rates selectively favours certain media companies and, as such, breaches EU state aid rules. A final decision will issue once the investigation has completed.

In addition, the Commission is seeking to establish whether this tax regime is compatible with the freedom of establishment as provided by Article 49 TFEU regarding whether the tax regime impacts Hungarian companies linked to companies with registered offices in other EU Member States. The Commission is communicating with Hungarian authorities to establish the facts.