CJEU – Recent Developments in Direct Taxation 2018

1. S. 102Introduction

The Hungarian government’s two-faced tax policy of lowering the general corporate income tax rate whilst introducing newer and newer special levies on certain selected sectors of the economy continues to generate controversy not only as regards the effectiveness of such a tax policy but also the lawfulness of these special levies. On the one hand, the goal of this policy is to give Hungary the image of an attractive tax jurisdiction with a seemingly generally applicable low corporate income tax rate and, at the same time, to maintain tax revenues at a sufficient level by taxing certain profitable industries more heavily. On the other hand, the special levies also provide the government with a convenient tool to achieve heavily charged political goals. The latest and most divisive measure in this series is a tax on the financing of activities that “facilitate migration”. This tax, which aims at making the work of NGOs carrying out humanitarian activities in connection with migration impossible, is so new that it has not yet been challenged, although it is likely to be in breach not only of the Hungarian Constitution but also Hungary’s international law and EU law obli...