Whisky-makers have toasted European Court judges after they called time on tax breaks for Hungarian traditional fruit spirit palinka.
The Scotch Whisky Association said its members’ products would benefit from a fairer playing field following the ruling, which came after it launched two formal complaints on tax and excise issues.
The industry body argued that palinka’s zero tax rate, imposed by the Hungarian government in 2010, amounted to protectionism for the country’s domestic spirits market.
EU regulations only permit a 50% reduction in taxes in certain circumstances, leading the European Court of Justice to reject Hungary’s tax regime.
SWA director of European affairs Nick Soper said: “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.”
Hungarian authorities were also asked by the European Commission to amend legislation which applies different excise rates for spirits depending on their composition and method of production.
It has called for a single rate to be applied under EU rules, and could refer the matter to the ECJ if Hungary fails to comply inside two months.