On 3 March 2020, the European Court of Justice (ECJ) decided in three cases having Hungarian aspects which may, among other things, influence the long-term tax policy of Hungary.

The taxpayers initiating the cases disputed the appropriateness of two Hungarian special sectoral taxes (for store retail trade and for telecommunication services), as well as the sanctions related to advertising tax. In line with the opinion of the advocate general, the ECJ found in favour of the National Tax and Customs Authority in connection with the special taxes, and for Google Ireland Ltd. in the case related to the advertising tax.

In the cases of Tesco-Globál Áruházak Zrt (C-323/18) and Vodafone Magyarország Mobil Távközlési Zrt. (C-75/18), the ECJ found that the different treatment arising from the use of progressive tax rates and the resulting higher taxation of economically stronger undertakings does not constitute an infringement of the freedom of establishment. The ruling in case C-323/18 also established that progressive taxation in the retail sector does not result in a selective advantage; in other words, it cannot be regarded as state aid provided for lower-turnover undertakings. It should also be noted that, on the basis of the ruling in case C-75/18, the special telecommunications tax is not a turnover tax, and its application is not contrary to EU law.

In the case of Google Ireland Ltd. (C-482/18), the ECJ found that the disproportionate fine imposed for failure to register for tax purposes and the limited legal redress result in a restriction of the freedom to provide services.

As a result of the rulings concerning the special sectoral taxes mentioned above, legislators in the Member States, including the Hungarian decision-makers, may consider the widening of the practice of imposing revenue-based progressive taxes.