Hungary: Motor vehicle tax prohibited customs duty | KPMG | GLOBAL

Hungary: CJEU judgment, Hungarian motor vehicle tax prohibited customs duty

Hungary: Motor vehicle tax prohibited customs duty

The Court of Justice of the European Union (CJEU) today released its judgment, holding that a Hungarian motor vehicle tax constitutes a charge equivalent to a customs duty that is prohibited under an agreement between the European Economic Community (ECC) and Turkey.

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The case is: Istanbul Lojistik Ltd, C-65/16 (19 October 2017)

 

As explained by today’s CJEU release [PDF 111 KB], in March 2015, Hungarian tax authorities ordered a Turkish company that carried textiles from Turkey to Germany to pay a Hungarian tax on a “heavy goods” vehicle and imposed penalties equal to 10 times the size of the tax. The Turkish company brought this action in a Hungarian administrative and labor court, claiming the tax amounts to a customs duty, which is prohibited by a decision (No 1/95) under the ECC-Turkey agreement. The Hungarian court referred the question to the CJEU.  

The CJEU today found that the tax in question, which is imposed unilaterally on products because they cross the border, constitutes a charge having the equivalent effect to a customs duty within the meaning of decision and is, therefore, incompatible with that decision.

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