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EU Challenges Hungarian, Italian, Romanian Tax Provisions

by Ulrika Lomas, Tax-News.com, Brussels

22 May 2018


The European Commission has initiated tax infringement procedures against Hungary, Italy, and Romania.

The Commission has sent a reasoned opinion to Hungary regarding the country's taxation of spirit drinks. The opinion concerns exemptions from the public health tax for fruit distillates, such as the national drink palinka, and for herbal drinks where national production is dominant. Vodka, whisky, gin, and brandy are not exempted and therefore face a higher rate of tax.

The Commission said that this regime violates Article 110 of the Treaty on the Functioning of the EU. If Hungary does not act to the Commission's satisfaction within the next two months, it may be referred to the European Court of Justice.

The Commission has sent a letter of formal notice to Italy, requesting that it align its rules with the EU's in the case of an excise duty exemption for fuel used to navigate within EU waters. The Commission said that Italy treats chartered pleasure boats as commercial vessels and therefore allows them to benefit from excise duty exemption on the fuel used to power their engines.

According to the Commission, this infringes EU tax rules, which do not allow such vessels to benefit from excise duty exemption. The Commission may send a reasoned opinion to the Italian authorities if they do not act within the next two months.

Finally, the Commission has requested Romania to align its vehicle registration taxes with EU law. It has sent a letter of formal notice to Romania for what it says is Romania's failure to ensure the full and immediate refund of registration taxes on second-hand vehicles purchased from other EU member states.

The Commission said that this infringes EU law because the Romanian rules do not fulfil the principles of sincere cooperation, equivalence, and effectiveness. Romania must act within the next two months, or the Commission may send a reasoned opinion to the authorities.

TAGS: compliance | tax | European Commission | tax compliance | Hungary | public health | law | Romania | excise duty | tax rates | Italy | tax reform | European Union (EU) | Europe

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