ECJ-Recent Developments in Direct Taxation 2013

S. 84I. Introduction

A. Scope of discussion

As one of the first measures of the Hungarian Government which entered into office in 2010, a special store retail trade tax was introduced retroactively in 2010. It is a special industry levy that has given rise to heated debate. Indeed, as special industry levies are a departure from fiscal neutrality, they may seriously distort economic decisions. A government enjoys, however, much leeway in introducing taxes and the fiscal neutrality principle, although welcome by the business community, is not protected under the constitution.

A tax always means a restriction: taking away a portion of income, property or turnover value from citizens or businesses. Such restrictions can be justified, however, provided that the tax as introduced is not found to be discriminatory. Whether the tax is discriminatory is the main issue with the Hungarian special tax, discussed in the C-385/12 Hervis case. If so, it should be condemned. Arbitrary discrimination is not allowed either in the European Union or under the domestic constitutional order. As a matter of EU Law, along with discrimination, national measures are also to be examined. This is because a Member St...