Budapest Council Prevails in Lawsuit Over Solidarity Tax
Budapest Court Rules in Favor of City Administration in Lawsuit Against State Treasury Over Solidarity Tax
A Budapest court has made a decisive ruling in favor of the city’s administration in a lawsuit against the state treasury over the solidarity tax, declaring previous tax collection orders as unlawful.
The Budapest metropolitan council had filed a lawsuit in 2023, arguing that the 28 billion forints (EUR 67.9m) in solidarity tax it had paid to the state treasury was unlawful as it exceeded the funding received from the government. The state treasury had initially claimed that the case only concerned its Pest County organization, but the Budapest Municipal Court disagreed. The court stated that the tax collection orders were issued by the state treasury, leading to the annulment of the treasury’s letters on the payment orders due to “fundamental formal legal deficiencies.”
Budapest Mayor Gergely Karácsony commented on the ruling, stating that the court clearly indicated that the state treasury had unlawfully charged the metropolitan council’s account. Karácsony emphasized that the treasury must transfer 28.3 billion forints plus interest to the city council, or legal action will be pursued. He mentioned that another lawsuit is pending concerning the 40 billion forints in solidarity tax paid by the city council in 2024, expressing confidence that the court would issue a similar decision following the recent ruling.
In response to Karácsony’s statements, the Prime Minister’s Office refuted his claims, asserting that under the court’s decision, Budapest still holds an obligation to pay the solidarity tax collected by the state from the metropolitan council. The office clarified that the court did not mandate the state to reimburse the tax; rather, it highlighted a procedural error on the treasury’s part, which the treasury has since rectified.
The legal battle over the solidarity tax between Budapest and the state treasury continues, with implications for future tax collection orders and financial responsibilities. The recent ruling by the Budapest court sets a precedent for addressing discrepancies in tax collection practices and upholding legal standards in fiscal matters.
