October 16, 2014 / Walk Street Journal

By VERONIKA GULYAS

Thursday confirmed it filed an official complaint to the European Commission about Hungary’s advertising tax, saying it hurt media pluralism and was discriminatory.

Hungary introduced a new advertising tax this summer levied on revenues with progressive tax rates ranging from 0% to 40%, payable by media companies on advertising placed in their broadcast.

RTL will be the only company subject to the top tax rate while its estimated share in the Hungarian advertising market is only 13.5%, RTL Group communications manager Andreas Meier told The Wall Street Journal.

RTL earlier said it expected the tax to cost the company about 15 million euros ($20.4 million) this year and described the tax as a blow to media freedom in Hungary and one that sends an alarming signal to all international investors in the country.

The government said RTL had no special reason to speak up against the tax since it was just one of several hundred other companies that are subject to the tax, the Hungarian government spokesperson’s office told The Wall Street Journal.

“The issue of the advertising tax is that of burden-sharing,” the office said in an e-mail adding the government will defend the tax in Brussels if needed.

The Commission said it was concerned about the Hungarian tax because it “raises questions across several policy areas,” said Emer Traynor, the European Commission spokesperson for Taxation, Customs, Statistics, Audit and Anti-Fraud. The Commission is set to ensure that the fundamental freedoms are respected and that no tax regulation goes against the EU single market legislation.

To get clear information from Hungary, the Commission in August required verification on whether the legislation at issue is not indirectly discriminatory in its effect on foreign-owned media providers linked to companies with registered office in another EU or European Economic Area state. It is now looking forward to a reply from Hungary for analysis.

“It is only once this analysis is completed that the Commission will decide whether to take any further steps, [such as opening] an infringement procedure against Hungary,” Ms. Traynor said.

The government earlier said RTL’s program quality is poor and the firm wants nothing else but to boost its profits.