In the current state of harmonisation of European Union tax law, Member States are free to establish progressive taxation based on the turnover of undertakings, provided that the constituent features of the measure in question do not reveal any manifestly discriminatory element, the Court of Justice of the EU ruled in a judgment on Tuesday 16 March (cases C-562/19P and C-596/19P).
The European Commission had filed two appeals seeking to have two judgments of the EU General Court annulled which validated the 2016 Polish tax introducing a progressive tax on the turnover of trade enterprises (T-836/16 and T-624/17) and a 2014 Hungarian tax introducing a progressive tax on the turnover of advertising broadcasters (T-20/17).
In its judgment, the Court examines whether the General Court was right to find that the Commission had not demonstrated that the Polish and Hungarian measures in question favour certain undertakings or the production of certain goods in comparison with the reference tax system applicable in the Member State concerned. In this respect, it confirms the analysis of the General Court that, in the current state of tax harmonisation in the EU, the progressivity of the rates provided for by the tax measures at issue is an integral part of the reference system in Poland and Hungary.
Furthermore, the European Court added, the Commission had not established that the characteristics of the two Polish and Hungarian taxes had been designed in a manifestly discriminatory manner, for example through an inconsistent choice of taxation criteria in relation to the objective pursued, so as to provide a selective advantage to certain economic operators.
See the Court’s judgment: http://bit.ly/3eSjnsK (Original version in French by Mathieu Bion)