End of ‘illegal’ tax loophole to benefit whisky

16th May, 2014 by Neal Baker

Exported drinks to Hungary, especially Scotch whisky, should now benefit from a fairer playing field after an “illegal” loophole in the Hungarian spirits market was brought to an end.

Scotch Whisky

The Scotch Whisky Association (SWA), who put Scotch whisky exports to Hungary to be worth £3.7million last year, launched two formal complaints with the European Commission (EC) and the European Court of Justice (ECJ) on taxation on issues to do with Hungary’s tax exemption for palinka, the country’s traditional fruit spirit.

Palinka had benefited from a zero tax rate as a result of a Hungarian government decision in 2010 placing domestically produced beverages at an advantage.

However following intervention from the SWA, on the basis that European Union regulations only allow a 50% reduction in certain circumstances, the ECJ ruled unequivocally that Hungary had breached its EU obligations and said that the tax exemption was illegal.

Nick Soper, director of European affairs at the Scotch Whisky Association, said: “The decision regarding tax treatment and excise rates in Hungary is welcome news for the Scotch Whisky industry and for free trade in the European Union.

“The European Court and the Commission have condemned the protectionist tax discrimination in Hungary and the damage it could do to fair competition, a basic premise of the Single Market.”

Separately, the EC has asked the country to amend its legislation applying two different excise rates for spirit drinks depending on their composition and production method.

The SWA had filed a complaint regarding duty discrimination, and the EC has now issued a ‘reasoned opinion’ asking Hungary to apply a single rate of excise on spirits.

EU rules state that one rate of excise duty must be applied to all spirit drinks based on their alcohol content. This is to stop competition being distorted within the EU.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

Subscribe to our newsletters

New Business Development Manager Nordic

Concha Y Toro
Stockholm, Sweden

Experienced Administrator

The Drinks Business
Central London, UK

Sales Executive (London – Craft Spirits)

Bimber Distillery
London, UK

2 x Buying Assistants

Berry Bros. & Rudd
Battersea and Basingstoke, UK

Temporary Christmas Sales Support - Wines & Spirits

Harrods
Knighsbridge, London, UK

Head of Wholesale

Hispamerchants Ltd
London, UK

Sales Manager

Hispamerchants Ltd
London, UK

The World Bulk Wine Exhibition

Amsterdam,Netherlands
20th Nov 2017

The Drinks Business Green Awards 2017

London,United Kingdom
20th Nov 2017

The Global Spirits Masters Lunch

London,United Kingdom
1st Dec 2017
Click to view more

Green Awards 2017

Deadline : 25th October 2017

The Global Riesling Masters 2017

Deadline : 30th October 2017

Click to view more

Champagne Masters 2017

The only Champagne blind tasting in the UK, the competition will reward the best wines in the following categories:

The Global Rosé Masters 2017

With wines from the palest of pink to almost ruby red, bone dry to almost cloyingly sweet, reductively handled to barrel-aged, as well as gently spritzy to fully sparkling.

Click to view more