While EU law permits Hungarian authorities to oblige Google and other foreign advertising service providers to submit a tax declaration, the penalty system in place was too disproportionate and thus amounted to a restriction on the freedom to provide services secured by EU treaties, found the European Court of Justice on Tuesday (3 March).
With its European headquarters in Ireland, Google had failed to comply with its obligation to submit a tax declaration required by Hungarian law.
The tech giant was initially fined €31,000 and then, within a few days, received additional fines, which in total amounted to € 3.1 million, the maximum fine which could be imposed. This amount is significantly higher than the amount foreseen for companies incorporated in Hungary and thus disproportionately burdened the company incorporated abroad, wrote the top EU court. (Vlagyiszlav Makszimov | EURACTIV.com)