The National Economy Ministry on Thursday said Hungarian rules on excise taxes for fruit distillate as well as “crisis taxes” on the telecommunications and retail sectors are “in full compliance with European Union law”.
The ministry issued the statement after the European Commission asked Hungary to amend legislation that exempts palinka, the national eau de vie, from excise tax under certain conditions. The Commission also sent Hungarian authorities a letter of formal notice on the special taxes levied on telcos and retailers, a Commission spokesperson confirmed on Thursday. The letter was sent after a close review of complaints that the taxes discriminated against foreign companies from other EU member states.
Government spokesman Andras Giro-Szasz said at a press conference later on Thursday that the government would give answers to the Commission on the three issues. If the Commission remains unconvinced, the government is prepared to defend its stand in the European Court, he added.
The ministry said the crisis taxes – progressive taxes based on revenue, not profit – could not be considered discriminative just because the biggest payers are foreign-owned companies.
“These companies have a significant presence in the affected sectors, as well as in the entire Hungarian economy,” the ministry said.
The ministry said distilling palinka is “undoubtedly a part of Hungarian cultural heritage”, a tradition which the state, similar to other EU members, wishes to preserve.
“For this reason the government established freedom to distill home made palinka with the practical elimination of the sprits tax on contract distilling. With this, Hungary wants nothing more than what other EU member states, such as Austria and Germany, are entitled to,” it added.