Decision looms for €3m fine for Google Ireland
Google Ireland will discover on Tuesday if it has successfully challenged a fine of over €3m imposed by the Hungarian government.
The Court of Justice of the EU is to rule on a case taken by Google Ireland seeking to annul the fine which was imposed by the tax authorities in Hungary.
An initial fine worth €30,600 which was issued in January 2017 involved the company’s failure to comply with an obligation to register for tax for selling advertising in Hungary.
Google Ireland was also subject to a daily fine for its alleged continuing failure to register as required under Hungarian law.
It brings the current overall fine to just over €3m.
Google started the action after the European Commission claimed the tax, which was introduced by Hungarian Prime Minister Viktor Orban, violated EU laws because its rates unfairly benefited some companies, as the tax was calculated on turnover.
The tax is applied to anyone who publishes advertisements on the internet, mainly in Hungarian, or on Hungarian internet pages.
The Hungarian authorities have claimed Google has obtained a competitive advantage.
They have argued that the €3m fine is justified because the complaint dates back to January 2015.
Google took the action to the court which is based in Luxembourg primarily on the basis that it claims the fine is much higher than any fine that can be imposed on domestic companies in Hungary.
It said that Hungarian firms become automatically assessed for tax payments when companies are registered in Hungary.
Google also complained that its rights to an effective remedy were infringed as the decision to impose the fine was final and enforceable from the moment it was issued.
Google has argued that it had limited scope to submit evidence to challenge the fine and that foreign-based taxpayers have extraordinarily little time to try and challenge such decisions.
Its chances of successfully challenging the fine were boosted last year when a Court of Justice of the EU advocate general issued a legal opinion in favour of Google.
She claimed the law was applied unfairly on companies based outside Hungary.
Although the EU General Court last year annulled the European Commission’s decision which found the Hungarian advertising tax law in breach of EU state-aid rules, Hungary subsequently capped and lowered the tax rate before pledging last year to reduce the tax rate to zero up to the end of 2022. Google Ireland is involved because the company’s European head offices are based in Ireland.
