Hungary's system of fines imposed on Google related to the country's tax on advertising is not compatible with EU law, the Court of Justice of the European Union said on Tuesday.
The ruling of the EU's top court concerned Google Ireland's failure to comply with an obligation to submit a tax declaration in Hungary to establish its liability to the Hungarian advertising tax. Google was subject to fines that rose to 1 billion forints ($3.29 million).
The court found that this system of fining in reality only applied to taxpayers not resident in Hungary. Hungarian entities could be fined, but at lesser amounts.
The court concluded that this difference of treatment was disproportionate and unjustified and constituted a restriction on the freedom to provide services within the European Union. ($1 = 303.6600 forints)