On 19 September 2016, the European Commission urged the Polish Government to suspend the proposed retail tax until the adoption of the final decision by the Commission. It examines whether the levy is compatible with EU state aid rules.
The Polish government suspended the entry into force of the tax until 1 January 2018. But the government doesn’t give up its plan to impose the tax on big retailers.
Since the accession to power of the PiS party in October 2015, the new government has been seeking new sources of finance for their electoral promises. In the 2016 budget, the government had initially included € 650 million of revenue from a retail tax.
In November 2015, work on the draft law had started. The special tax gave rise to debates between the government and the entire retail sector. From the outset, the government was accused of discrimination and violation of internal market rules. National as well as EU trade associations filed a complaint with the European Commission and protested to the Polish Government several times.
(See also the press release by EuroCommerce)
In February 2016, the Polish trade industry organized protests which resulted in the exclusion of the franchise systems from the tax payment liability. However, despite national and international protests, on 30 July 2016 President Andrzej Duda signed the act on tax on retail sales which entered into force on 1 September. Thus, the trading companies subjected to the tax liability would have to pay the first tax already at the end of October.
Together with the national trade association POHiD, EuroCommerce immediately filed a complaint with the European Commission and pointed out that, similar to the Hungarian food supply chain fee at its time, the progressive tax rate with a tax allowance constitutes a disproportionate discrimination by retailers of a certain size, distorts competition and thereby constitutes a violation of the European state aid rules.
On 19 September 2016, the European Commission urged the Polish Government to suspend the tax until the adoption of the final decision by the Commission. It examines whether the levy is compatible with EU state aid rules. The Polish government responded to the decision of the European Commission and suspended the entry into force of the tax until 1 January 2018. At the same time, the government announced that it would file an appeal against decision of the European Commission to the European Court of Justice. The government consistently sticks to its plan to impose the tax on big retailers.
We will continue to monitor the course of this and other laws that interfere with the internal market and that establish new discrimination in trade across the EU. Unfortunately, neither Poland nor Hungary are isolated cases in the internal market. In general, there is a trend of protectionist and nationalistically motivated violations or evasions of the European Single Market in many EU countries which causes us concern.
An erosion of the internal market takes an axe to the pillars supporting the economic development in the European Union and threatens the global competitiveness of the internal market as a whole. It is a populist fantasy that the continued development of prosperity in the regions of the EU is possible by lifting the four fundamental freedoms of the internal market – free movement of goods and capital, the freedom to provide services and the freedom of movement for workers. But individual Member States or even regions are far too small and are not equipped to withstand the pressure of huge global competitive forces.