Commission refers Hungary for failure to end special tax on telcos
The European Commission has decided to refer Hungary to the EU’s Court of Justice because, it alleges, Hungary’s Government continues to impose a specific tax on the turnover of telecoms operators in violation of EU rules.
The tax was one element of a “crisis tax” introduced in October 2010 on three major sectors of the economy (retail commerce, telecoms and energy) to improve Hungary’s budgetary position. The Commission considers this tax to be illegal, because EU telecoms rules allow sector-specific charges only to cover the specific costs of regulating the sector, and not to generate additional revenue for the central budget.
The Commission said that increasing the financial burden of telecoms operators could have an impact on consumers’ bills, distort competition and impede investment in a sector expected to drive growth under the Digital Agenda. Hungary has also failed to comply with its obligation under EU law to consult interested parties in an appropriate manner on any amendments of charges applied to telecoms operators, the EC said.
The rate of the charge levied on telecom operators varies between 0% and 6.5%, on the basis of gross revenues (excluding VAT). The Commission alleged that the amount of budgetary revenue (over 200 Million euros per annum) that the tax has started to generate reinforces the distortive effects of this charge, and creates a considerable obstacle to the achievement of the Digital Agenda objectives
The Commission opened infringement proceedings against Hungary concerning the telecoms tax in March 2011. It followed this up in September 2011 with a reasoned opinion formally asking Hungary to abolish the telecoms tax.
EU telecoms rules, in particular Article 12 of the Authorisation Directive (2002/20/CE), lay down precise provisions relating to the administrative charges that Member States can levy on operators authorised to provide telecoms services and networks. Charges on telecoms operators can only cover certain administrative and regulatory costs. At the same time, they should be objective, transparent and proportionate and should be adjusted if appropriate. Interested parties must also be consulted in an appropriate manner of any amendments to the charges.
In March 2011, the Commission referred Spain and France to the EU’s Court of Justice for levying charges on telecom operators in breach of EU telecoms rules.