State aid: Commission opens in-depth investigation into Poland’s tax on the retail sector

The European Commission has opened an in-depth investigation into a Polish tax on the retail sector. The Commission has concerns that the progressive rates based on turnover give companies with a low turnover a selective advantage over their competitors in breach of EU state aid rules. The Commission has also today issued an injunction, requiring Poland to suspend the application of the tax until the Commission has concluded its assessment. At this stage the Commission has concerns that the application of progressive rates based on turnover confers a selective advantage on companies with low turnover and therefore involves state aid within the meaning of the EU rules. This progressive rate structure has the effect that companies with low turnover either pay no retail tax or pay substantially lower average rates than companies with high turnover. The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives interested third parties the opportunity to comment on the measures under assessment. It does not prejudge the outcome of the investigation. Today’s opening decision follows a decision the Commission took in July 2016 on a progressive turnover-based tax on the retail sector in Hungary, which the Commission found to be in breach of EU state aid rules because it granted a selective advantage to companies with low turnover over their competitors.