CJEU – Recent Developments in Direct Taxation 2019

1. S. 19Tesco-Global Áruházak (Case C-323/18) and Vodafone Magyarország (Case C-75/18)

1.1. Introduction

Recently, a trend can be observed for an increasing number of countries to introduce taxes that are levied on turnover instead of on profits and are applied – sometimes on a temporary basis – only in certain sectors of the economy in addition to the corporate income tax. The targeted sectors are usually those most profitable, where large multinational enterprises operate and – in smaller countries – tend to dominate the local market. Many of these taxes are levied at progressive rates or at above a certain turnover threshold.

Hungary has been a frontrunner in introducing such taxes, examples of which are a tax on telecommunications enterprises, energy suppliers, retail trade businesses, and advertising activities. The justification put forward by the Hungarian government for these taxes is twofold. On the one hand, they claim that these taxes promote public burden sharing because the multinational enterprises operating in these sectors have greater fiscal strength and thus more of an ability to pay than other taxpayers. On the other hand, these multinationals tend to engage in aggressiv...