EU COURT’S DECISION ON THE HUNGARIAN FOOD CHAIN INSPECTION FEE AND TOBACCO SALES TAX
In 2015 Hungary introduced two special progressive taxes, i.e. the ‘food chain inspection fee’ in order to cover the costs of sanitary inspections and the ‘healthcare contribution’ to reduce the negative effects of tobacco products on public health and the expenses of operating public healthcare. On 15 July 2015, the European Commission (EC) adopted suspension injunctions, in which it prohibited Hungary from applying the above mentioned special taxes. The EC had also initiated in-depth state aid investigations with respect to these measures and concluded on 4 July 2016 that the progressive tax schedules of both measures are incompatible with the EU state aid rules, since they provide selective advantages to certain companies (i.e. companies with lower turnover).
In the meanwhile, Hungary challenged the suspension injunctions adopted by the EC before the Court of Justice of the European Union (CJEU). Finally, on 25 April 2018 the CJEU adopted its decision and stated that the EC’s suspension injunctions that prohibited the application of the two special progressive taxes were lawful and rejected Hungary’s claims.