On Wednesday 29 April, the European Commission decided to refer Hungary to the Court of Justice of the European Union on the grounds that Hungary has failed to bring its retail tax regime into line with the freedom of establishment guaranteed by Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU).
According to the Commission, foreign-controlled retail companies operating in Hungary as integrated companies or linked enterprises are subject to high and highly progressive tax rates on their turnover, whereas domestic retailers operating under their respective brands and logos through franchise systems are not subject to these maximum rates, as their turnover is not consolidated for tax purposes.
In particular, the regime prevents foreign-controlled retail companies from restructuring their business operations in the same way as domestic retailers. In the Commission’s view, this regime therefore “constitutes a restriction on freedom of establishment”.
According to the Commission, despite a letter of formal notice in October 2024, followed by a reasoned opinion in June 2025, Hungary has taken no action. (Original version in French by Camille-Cerise Gessant)