European Commission to investigate Hungary's food chain inspection fee

By Joseph James Whitworth

- Last updated on GMT

First payments were due at end of July but the Commission has issued an injunction
First payments were due at end of July but the Commission has issued an injunction

Related tags European union

The European Commission is investigating Hungary's food chain inspection fee to see if it is in line with state aid rules.

The Commission said it has concerns the progressivity of the rates based on turnover provides companies with a low turnover an advantage over competitors.

The purpose of the food chain inspection fee is to contribute to financing of the food chain safety strategy and activities of the relevant authority.

The Hungarian Food Chain Act requires operators to pay a so-called "food chain inspection fee".

Shops selling "fast-moving consumer goods" are subject to the fee at steeply progressive rates, according to a 2014 amendment.

"Fast-moving consumer goods" include foodstuffs, cosmetics or drugstore products.

Fee entered into force at start of year

Stores with a low turnover are either fully exempted or liable to pay a substantially lower food chain inspection fee (0.1% of turnover) than stores with a higher turnover (up to 6% of turnover).

The Commission said while a fee based on turnover does not in itself raise state aid issues, the progressivity of the fee rates favours companies with a low turnover and gives them an unfair competitive advantage.

It has issued an injunction, prohibiting Hungary from applying the progressive rates of the food chain inspection fee until it has concluded its assessment.

The rules entered into force on 1 January 2015 and the first payments were due at the end of July.

Until the end of December 2014, all food chain operators, including suppliers from other Member States, had to pay a fee based on turnover at a flat rate of 0.1%.

Hungary modified its Food Chain Act introducing specific rules for the calculation of the inspection fee applicable to stores selling fast-moving consumer goods on the Hungarian market.

It introduced a steeply progressive fee rate structure with eight different rates from 0% to 6%.

Stores selling fast-moving consumer goods with small or medium-sized turnover are exempted from the tax (below HUF 500m/ approx. €1.6m) or subject to a 0.1% rate (between HUF 500m and HUF 50bn/ approx. €1.6 - €161m).

Companies with higher turnovers are subject to it at progressive rates above 1%, reaching 6% for turnovers exceeding HUF 300bn (approx. €966m).

All other food chain operators remain subject to the fee calculated on relevant turnover at a flat rate of 0.1%.

The Commission also said it has doubts the fee can be considered compatible with EU legislation on official controls along the agri-food chain.

These rules allow, and can require, Member States to collect fees to cover the costs of official controls by national authorities.

The Commission has reservations as to whether the amended Hungarian fee levels correspond to, and do not exceed, the costs of such controls.

US audit of Hungary food safety system

Meanwhile, after two years the US Department of Agriculture’s Food Safety and Inspection Service (USDA-FSIS) has held inspections in Hungary.

FSIS audited the monitoring system of the animal-based food producers between 17 June and 3 July.

According to preliminary findings, the food safety system assures full compliance with US requirements, said the Hungarian Ministry of Agriculture. 

Hungary’s total pork exports are increasing year by year, with 138,000 tons exported in 2014 at a value of around 100 billion forints (€315m).

Related topics Food Safety & Quality

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