Economy
RTL Group sees turning to Commission justified as Hungary passes new tax package
Gov’t wants to send RTL packing
A 2015 tax law approved by Hungarian lawmakers on Tuesday increased the rate of the tax, which was introduced earlier this year, for the top bracket (for companies with a revenue base over HUF 20 billion), to 50% from 40%.
RTL is the only company with revenues big enough to require it to pay the top rate of the new tax.
The company said that, as a result, its tax payments will now account for about 85% of the revenue raised by the advertising tax, while its share of the Hungarian advertising market is 15%.
"This demonstrates the discriminatory nature of the tax, which is targeted mainly at RTL," the company said in an emailed response to Reuters' questions.
"The goal is a clear attempt to have RTL Group leave the Hungarian market, so you can call it an expropriation attempt," it said.
A spokeswoman for the economy ministry did not answer calls seeking comment. Previously, the government has said the tax was designed to stop profitable multinational media companies faking losses to avoid tax.
Local RTL officials said earlier this year that the creation of the tax was a punishment for criticism of the government aired on the channel's news programmes.
An RTL Group spokesman in Munich said the increase in the tax confirmed that it had made the right decision to take the issue to the European Commission.
The spokesman also reiterated the group would assess the value of its Hungarian unit at the end of the year and decide whether further writedowns were needed.
RTL took an EUR 88 million impairment in August due to the tax.RTL turned court in October
RTL Group filed an official complaint at the European Commission over the advertising tax imposed on media companies in Hungary. The government said the tax remains even if it has to go to court over it.
The EU executive is looking into the new levy, as RTL Klub pays more than half of the advertising tax while its market share is only 13.5%.
According to EU procedural law, RTL Group may not turn to court directly over the advertising tax, it may only file a complaint at the EC with the claim that the law in question infringes EU rules. If the Commission deems the complaint valid, it could even lead to a procedure by the European Court of Justice. RTL reportedly claimed the law (i.e. the advertising tax) was discriminative.
HUF 5 bn next year
The law on the advertising tax is to be modified. One of the key changes is that the upper rate will be hiked to 50% from 40%, which could hurt RLT Klub the most. Programming director Péter Kolosi told local daily Népszabadság over the weekend that next year RTL could pay HUF 5 billion worth of advertising tax next year. The broadcaster’s first instalment of the new levy, which was due by 20 August this year, amounted to HUF 1.054 billion and another HUF 1.1 bn will be paid to state coffers by 20 Nov.
A 2015 tax law approved by Hungarian lawmakers on Tuesday increased the rate of the tax, which was introduced earlier this year, for the top bracket (for companies with a revenue base over HUF 20 billion), to 50% from 40%.
RTL is the only company with revenues big enough to require it to pay the top rate of the new tax.
The company said that, as a result, its tax payments will now account for about 85% of the revenue raised by the advertising tax, while its share of the Hungarian advertising market is 15%.
"This demonstrates the discriminatory nature of the tax, which is targeted mainly at RTL," the company said in an emailed response to Reuters' questions.
"The goal is a clear attempt to have RTL Group leave the Hungarian market, so you can call it an expropriation attempt," it said.
A spokeswoman for the economy ministry did not answer calls seeking comment. Previously, the government has said the tax was designed to stop profitable multinational media companies faking losses to avoid tax.
Local RTL officials said earlier this year that the creation of the tax was a punishment for criticism of the government aired on the channel's news programmes.
An RTL Group spokesman in Munich said the increase in the tax confirmed that it had made the right decision to take the issue to the European Commission.
The spokesman also reiterated the group would assess the value of its Hungarian unit at the end of the year and decide whether further writedowns were needed.
RTL took an EUR 88 million impairment in August due to the tax.RTL turned court in October
RTL Group filed an official complaint at the European Commission over the advertising tax imposed on media companies in Hungary. The government said the tax remains even if it has to go to court over it.
The EU executive is looking into the new levy, as RTL Klub pays more than half of the advertising tax while its market share is only 13.5%.
According to EU procedural law, RTL Group may not turn to court directly over the advertising tax, it may only file a complaint at the EC with the claim that the law in question infringes EU rules. If the Commission deems the complaint valid, it could even lead to a procedure by the European Court of Justice. RTL reportedly claimed the law (i.e. the advertising tax) was discriminative.
HUF 5 bn next year
The law on the advertising tax is to be modified. One of the key changes is that the upper rate will be hiked to 50% from 40%, which could hurt RLT Klub the most. Programming director Péter Kolosi told local daily Népszabadság over the weekend that next year RTL could pay HUF 5 billion worth of advertising tax next year. The broadcaster’s first instalment of the new levy, which was due by 20 August this year, amounted to HUF 1.054 billion and another HUF 1.1 bn will be paid to state coffers by 20 Nov.
