EU: Commission refers Hungary to CJEU over retail tax regime
The European Commission argues the tax regime infringes on the freedom of establishment.
The European Commission (EC) on April 28, 2026, announced its decision to refer Hungary to the Court of Justice of the European Union (CJEU) for failing to align its retail tax regime with the freedom of establishment guaranteed by Articles 49 and 54 of the Treaty on the Functioning of the European Union.
According to the EC release, the retail tax is based on net retail sales volume with a steeply progressive tax rate. This structure negatively affects foreign-controlled retail companies, which typically operate as integrated companies or linked undertakings, because their turnover is consolidated for tax purposes, subjecting them to the highest tax rates. In contrast, many domestic retailers operate under franchise systems, meaning their turnover is not aggregated, and they are subject to the lowest tax rates. The regime also prevents foreign-controlled companies from restructuring their operations to reduce their tax burden in the same way.
The referral to the CJEU follows a letter of formal notice sent to Hungary in October 2024 and a reasoned opinion in June 2025. As Hungary has not taken steps to repeal the retail tax regime, the EC is referring it to the CJEU.