EU opens investigation into Poland's retail tax

The European Commission has opened an in-depth investigation into a Polish tax on the retail sector and has issued an injunction, requiring Poland to suspend the application of the tax until the Commission has concluded its assessment. 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. Poland has introduced the retail tax with two rates of 0.8 percent for turnover between PLN 17 and PLN 70 million and 1.4 percent for turnover above PLN 170 million.  The levy also includes PLN 17 million tax-free turnover. The Commission does not question Poland's right to decide on its taxation levels or the purpose of different taxes and levies. However, the tax system should respect EU law, including state aid rules, and should not unduly favor a particular type of company, for example companies with lower turnover. In July 2016, the Commission took a decision 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.