CJEU - Recent Developments in Direct Taxation 2020

S. 21. Introduction

The Hungarian advertisement tax provides for yet another aspect of the controversy that swirls around turnover-based taxes. The stringent procedural rules of the same tax have already been subject to scrutiny under the prism of the non-discrimination clause of a double tax convention and of the EU fundamental freedom provisions. The present case concerns the State aid compatibility of the substantive rules of the advertisement tax, namely its progressive tax rate structure and its special tax-loss carry-forward rules. The examination of progressive turnover-based taxes in light of the State aid rules has been timely as in academic literature, several scholars have expressed their concerns that such taxes might amount to prohibited State aid under Article 107 of the TFEU. The question of compatibility of progressive turnover-based taxes with the State aid rules was already raised before the Court of Justice of the European Union (CJEU or Court) in the context of the Hungarian telecommunications and store retail trade taxes. However, the CJEU found the question inadmissible, leaving this intensely discussed query unanswered. Hopefully, the future judgment of the CJEU i...