It appears there is a mini legal war brewing between Hungary’s government and the Austrian supermarket chain SPAR this week, after Prime minister Viktor Orban’s chief of staff said the Hungarian government plans to sue SPAR for defamation.
Other than the comment about suing SPAR “presumably for defamation”, however, he didn’t specify why that was.
SPAR complained to EU re: Hungarian law targeting foreign-owned retailers
His comment, though, is likely to be connected to the ongoing disagreement between Austria’s SPAR supermarket chain and the government, after executives at SPAR wrote to European Union commissioners last month complaining about a new tax that had been implemented in 2020.
According to SPAR, that tax meant, while Hungarian-owned supermarkets were paying a very low tax rate (between 0-1%), foreign-owned supermarkets were being forced to pay up to 4.5%.
The tax applies to both sales in physical stores as well as those made online.
The law also mandated foreign-owned retailers must lower their prices across a range of staples, after Orban insisted food prices in Hungary were rising due to foreign retailers overcharging for their products.
SPAR says they cannot afford 4.5 percent tax
As supermarkets operate on an extremely low profit margin, making their money on volume of sales instead of price of goods sold, SPAR insists it cannot afford to operate in Hungary with that law in place, as the tax is higher than their profits.
As Hungary is an EU member, SPAR also insists it is against EU law for the company from another EU member to be charged a higher tax than companies within that country.
Hence, why the company is asking EU officials to intervene.
Tesco and Lidl also operate in Hungary
Austria’s SPAR is the second-biggest foreign retailer in Hungary, but many other foreign retailers also operate in the Eastern European country.
Other non-Hungarian retailers like the UK’s Tesco and Germany’s Lidl were approached by The Financial Times for comment about their own situation as relates to the new tax law, but both declined to do so.
Neither have they complained to the EU like SPAR. At least, not yet.
Meanwhile, the EU simply responded to SPAR’s letter by stating they would “look into” the complaint, but nothing more has been heard from them.