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Hungary Confirms Tax For Unexpected Financial Obligations

By Lorys Charalambous, Tax-News.com, Cyprus

13 June 2013


Hungary has confirmed that it intends to make legal provision for a special tax to pay for "unexpected financial obligations" incurred by the country, although it has dropped plans to link the charge to adverse judgments from the European Court of Justice and other courts.

Foreign Minister János Martonyi made the announcement after sending a letter to the European Commission responding to criticisms. He explained that provision for the tax, which would be imposed if resources were insufficient, would complement Government plans for economic stabilization.

Viviane Reding, who is Vice-President of the European Commission and the EU Justice Commissioner, had warned Hungary in April that moves to amend the country's fundamental law to include a levy to pay for ECJ rulings would undermine the authority of the court and could be a violation of the European Union Treaty. She also argued that Hungarian citizens would be penalized twice-over by the measure: in the first instance, when their rights under EU law were not upheld within Hungary, and then again by being taxed when this was confirmed by the ECJ.

Martonyi believes that by scrapping the amendment and addressing other matters raised by the EU, Hungary has avoided an infringement procedure. He explained: "I think that a satisfactory solution has been found, because the European Commission fundamentally objected to the specific reference made in the text to a ruling of the Court of Justice of the European Union."

The EU had also expressed concern about the transfer of court cases and restrictions on political advertising. Martonyi promised "structural and organizational changes" in relation to courts, and he complained that the automatic transfer of cases had resulted in "unjustified" attacks on the Hungarian judicial system. On political advertising, the letter to the EC asserts Hungary's right to make its own decisions, and Martonyi cited the examples of Poland and Bulgaria.

TAGS: court | tax | European Commission | Hungary | law | legislation | legislation amendments | Europe

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