(BRUSSELS) – The EU Commission opened an in-depth probe into a Polish tax on the retail sector Tuesday, concerned that the progressive rates based on turnover give companies with low turnover an unfair advantage.
The European Commission’s injunction requires Poland to suspend the application of the tax until the Commission has concluded its assessment.
This follows a decision the Commission took in July this year on a progressive turnover-based tax on the retail sector in Hungary, which the Commission found to be in breach of EU state aid rules, because it granted a selective advantage to companies with low turnover over their competitors.
This investigation concerns a tax adopted by Poland in July which applies to companies that operate in Poland and are active in the retail sale of goods.
The tax only entered into force on 1 September, with no payments yet collected.
Under the tax, companies in the retail sector would pay a monthly tax to the State based on their turnover from retail sales. In particular, the retail tax features a progressive rate structure with three different brackets and rates.
Poland did not notify the tax to the EU, leaving it to media reports to alert the Commission to this possible breach of EU state aid rules.
While there is no question of Poland’s right to decide on its taxation levels or the purpose of different taxes and levies, there is a requirement that the tax system should respect EU law, including state aid rules, and should not unduly favour a particular type of company, for example companies with lower turnover.
The Commission says Poland has so far not demonstrated why larger retail operators should be taxed different from smaller players in light of the objectives of the tax on retail sales.
With the opening of an in-depth investigation, interested third parties now have an opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigation.
In July, the Commission concluded that a Hungarian progressive turnover-based tax on the retail sector was in breach of EU state aid rules because the progressive tax rates granted a selective advantage to companies with low turnover over their competitors.
Further information is available on the Commission’s competition website, in the public State Aid Register under the case number SA.44351
