Resumen de Hungarian Tax on Digital Advertising Services in the Spotlight of Challenges
The paper first raised questions about the extraterritoriality issue on digital advertising services’ taxation. Moreover, it addresses the application of a sales tax with progressive rates for these services. The paper emphasizes that linking sales taxes and tax progression is doubtful. In cross-border cases, justification problems may restrict fundamental EU freedoms and effectuate the issue of discrimination against those multinationals that provide services like publishing ads over the internet in Hungarian consumer markets.
Notably, the EU judicial authorities have acted in a formalistic manner. Specifically, they have matched the existing EU rules and principles with the advertising tax case without further consideration. Consequently, the Member States’ legislative objective of redistribution, which refers to the ability to pay, was not reviewed on its merits.
While the government is seeking to hone the Hungarian advertising tax from 2023, the question is how long it will remain in force due to the international two-pillar agreement finalized by the OECD. The Hungarian tax has passed many tests, but the respective legal construction has remained unsecured and has not been intact from further challenges.
