TELECOMMUNICATIONS : COMMISSION TAKES HUNGARY TO COURT OVER TELECOMS TAX.

The sentence was expected. Hungary, entangled in numerous disputes with the European Commission, will have to defend its specific tax on telecoms operators, considered a breach of Community legislation, before the EU Court of Justice.

In October 2010, Viktor Orban's government introduced this "crisis tax" initially for three years - also applied to energy and retail trade - to boost the state's tax revenues. After operators raised an outcry, the Commission immediately stepped in and ruled the measure illegal "because it is paid to the state's central budget and is not levied to cover regulatory costs specific to the telecoms sector". Applied on the basis of operators' gross earnings (excluding VAT), its rate varies from 0% to 6.5%. The tax raises more than 200 million a year.

All operators in the country - Telenor, Vodafone, Invitel and Magyar Telekom - are concerned.

Court actions have also been taken in similar cases involving France and Spain, which have both refused to abolish their telecoms...