Hungary threatens SPAR after launch of EU infringement procedure
A new stage for the battle
Another measure has put one of the foreign retail chains present in Hungary and the government at loggerheads, this time over the retail sales tax. And in this case, the Ministry of National Economy has effectively shown SPAR the door.
In its latest statement, the ministry reacted to the news of a new infringement procedure launched on Thursday (on the initiative of SPAR and the Austrian government) concerning the special retail tax.
The European Commission claims that the current Hungarian tax system (special retail tax) infringes the EU's freedom of establishment, as foreign-owned large companies are subject to much higher, highly progressive special tax rates based on turnover than Hungarian-owned retailers operating in a franchise network. According to the EC, this creates a discriminatory situation vis-à-vis foreign firms. It is recalled that the European Commission announced in April that it was launching an investigation into the Hungarian retail tax after the Austrian government and SPAR complained that it discriminated against foreign companies and violated EU law.
This, according to the NGM, means that "SPAR has launched a new political attack on Hungary and Hungarian families with Brussels on its side, by once again attacking the Hungarian retail tax.
The ministry recalls that the EC is once again challenging a measure that the Court of Justice of the European Union already ruled in 2020 to be in line with EU standards.
This measure was already contested once, we defended it then and we will defend it now,
the ministry said.
"In its previous judgment, the Court of Justice recalled that member states are free to determine the tax system they consider most appropriate and to apply progressive taxation to turnover. However, the Court also stressed that, since all undertakings carrying on activities in the sector concerned in Hungary are subject to the tax at issue and since the tax rates applicable to the different turnover bands are applicable to all those undertakings, the Hungarian legislation introducing that tax does not constitute any direct discrimination and the special tax imposed in Hungary was therefore also considered compatible with the freedom of establishment," the Ministry explained in detail.
A strong message from the ministry
"The position of the Ministry of National Economy remains unchanged: only those companies can remain in the Hungarian market that, in addition to their law-abiding behaviour, take into account the interests of Hungarian consumers, i.e. offer Hungarian families good quality products at good prices.
There is no place in the Hungarian economy for those who do not respect or have not respected Hungarian consumers and have overpriced,
the NGM said, adding that "the government will, as it has done in the past, continue to use all its means to take the strongest possible action against unjustified extra profits and unfair behaviour that harms families".
Based on the previous reactions of members of the government and the NGM, and in light of the strong message now being sent, it seems clear that
the government would prefer Spar to leave the country.
Márton Nagy told a press conference two weeks ago that the EU court sided with the international multinationals when it ruled against the government on the fine imposed on SPAR.
"Ever since SPAR attacked the Hungarian government and its leader, when the owner made a statement, and when SPAR took the Hungarian government to court, it would be quite strange to say that SPAR has not entered the political arena," the minister said at the time.
SPAR has entered politics, and in this space the rules are different,
said Márton Nagy.
A battle of several frontlines
It is not only on the retail sales tax and compulsory sales discounts measure that the two sides are at loggerheads. Two weeks ago, news broke that the Hungarian Economic Competition Authority (GVH) is investigating the implementation of the commitments undertaken by SPAR Hungary Commercial Ltd.
Cover photo: MTI/MTVA/Renáta Lapis
