CELEX: 62019CN0596
Language: en
Date: 2019-08-06 00:00:00
Title: Case C-596/19 P: Appeal brought on 6 August 2019 by the European Commission against the judgment of the General Court (Ninth Chamber) delivered on 27 June 2019 in Case T-20/17 Hungary v European Commission

14.10.2019   
            
            
               EN
            
            
               Official Journal of the European Union
            
            
               C 348/10
            
         
      Appeal brought on 6 August 2019 by the European Commission against the judgment of the General Court (Ninth Chamber) delivered on 27 June 2019 in Case T-20/17 Hungary v European Commission
      (Case C-596/19 P)
      (2019/C 348/11)
      Language of the case: Hungarian
      
         Parties
      
      
         Appellant: European Commission (represented by: V. Bottka and P.-J. Loewenthal, acting as Agents)
      
         Other parties to the proceedings: Hungary and Republic of Poland
      
         Form of order sought
      
      By its appeal, the European Commission claims that the Court should:
      
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                  set aside the judgment of the General Court (Ninth Chamber) delivered on 27 June 2019 in Case T-20/17, Hungary v Commission;
               
            
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                  reject the second and third pleas presented by Hungary before the General Court, whereby Hungary alleges breach of the obligation to state reasons and misuse of powers; and order Hungary to pay all the costs relating both to the proceedings at first instance and the appeal;
               
            
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                  or, in the alternative, refer the case back to the General Court for a new judgment ruling on the pleas that have not yet been examined; whilst reserving the costs relating both to the proceedings at first instance and the appeal.
               
            
         Grounds of appeal and main arguments
      
      In the first ground of appeal, the Commission claims that the General Court infringed Article 107(1) TFEU by finding that the structure of progressive tax rates of the Hungarian tax on advertisements was not selective. The Commission bases that claim on three grounds:
      
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                  First, in paragraphs 78 to 83 of the judgment under appeal, the General Court erred in stating that when the Commission identified the reference system, it incorrectly excluded the progressive rates of the Hungarian tax on advertisements. Contrary to what was held by the General Court, the approach proposed by the Commission in its decision is consistent with the case-law. Consequently, the General Court erred in the determination of the reference system.
               
            
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                  Secondly, in paragraphs 84 to 90 of the judgment under appeal, the General Court erred in finding that the Commission had erroneously identified the objective of the tax on advertisements, in the light of which comparability must be assessed. According to the settled case-law of the Court of Justice, as regards the assessment of comparability, only the objective of the tax concerned by the measure is relevant, that is to say, the tax purpose of the measure determined by the taxable event. Other objectives, such as taxpaying capacity, are only relevant in connection with whether any differentiation in the implementation of the tax can be objectively justified, provided that such objectives are inherent in the nature of the tax. Therefore, the General Court erred in referring to an alleged redistributive objective in relation to the tax on advertisements for the purposes of assessing comparability.
               
            
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                  Thirdly, the position of the General Court, as expressed in paragraphs 91 to 105 of the judgment under appeal, to the effect that the Commission erred in concluding that the objective of redistribution does not justify the progressive nature of the tax based on turnover, is incorrect. The General Court’s finding that the Hungarian tax on advertisements is not discriminatory and has a redistributive purpose is based on the erroneous premiss that undertakings with high turnover necessarily make greater profits than undertakings with a lower turnover. On the basis of that erroneous premiss, the General Court erred in law by accepting, as justification for the differentiation resulting from that tax, an objective that is not inherent in the nature of that tax. Furthermore, by accepting that erroneous premiss, the General Court unduly reversed the burden of proof, thus requiring the Commission to establish that the rates of the Hungarian tax on advertisements cannot be justified on the basis of its alleged redistributive objective.
               
            In the second ground of appeal, the Commission claims that the General Court infringed Article 107(1) TFEU by finding that the deductibility of 50 % of the losses was not selective. First, the measure is not compatible with the reference system it is allegedly part of, since it allows taxable persons liable to pay the tax on the basis of their turnover to deduct the losses carried forward, which fails to reflect the profits made by an undertaking. Secondly, the measure is not of a general nature, contrary to the finding of the General Court, and does not depend on a random criterion; rather, taxable persons that were profit making in the preceding tax year could be identified at the time of the introduction of the tax.