The European Commission has announced an in-depth investigation into a tax on the food retail sector in Slovakia, citing concerns that certain exemptions from the tax give some retailers a selective advantage over their competitors.
The tax came into effect on 1 January, and the first payments were due to be made by the end of April.
However, the European Commission believes that the tax, in its current form, may be in breach of EU state aid rules, and it has issued an injunction requiring Slovakia to suspend the application of the measure until the Commission has concluded its assessment.
Acting Swiftly
EuroCommerce, which represents the retail sector in Europe, commended the Commission for “acting swiftly to investigate, and meanwhile suspend, the Slovak retail tax under state aid rules,” said EuroCommerce director general Christian Verschueren.
“This decision is a signal to member states that they are not allowed to discriminate against foreign-owned retailers who have contributed substantially in terms of investment and commitment to their markets. It is sad that member states are less and less committed to the single market, and are prepared to deprive consumers of more choice and better prices for short-term political gain,” added Verschueren.
EuroCommerce initially lodged a complaint against the tax in December 2018.
The tax, which applied almost exclusively to foreign-owned companies active in the country, requires them to pay 2.5% of their net turnover, from which the Slovak government expected to raise €100 million. EuroCommerce claimed that, by exempting most Slovak-owned retail chains, the tax constituted unlawful state aid, similar to other retail taxes proposed in Poland and Hungary.
Single Market
“The retail and wholesale sector relies, like all business, on the EU single market working properly and competition law underpinning this,” said Verschueren.
“Where some people are questioning competition law and its relationship with business, this is a clear demonstration of how the Commission’s vigilance and application of the rules provides concrete help to businesses – and, above all, consumers – to benefit from EU rules,” he added.
According to the Commission's preliminary assessment, the relevant tax exemptions are not justified by the logic of the Slovak tax system, which is to redistribute retail groups’ profits within the food supply chain for the benefit of farmers and food producers.
Slovakia has so far not demonstrated why the companies exempted from the tax are in a different situation compared to the companies paying the tax, the Commission reported.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
