Hungary says it will sue Austrian supermarket chain Spar for defamation

Spar did not immediately respond to a request for comment. The Austrian government and Spar sent letters to European Union commissioners in March saying that a special tax introduced in 2020 discriminated against foreign retailers in Hungary, and was therefore in breach of EU law.

Hungary's government plans to sue Austrian supermarket chain Spar for defamation, Prime minister Viktor Orban's chief of staff told a press conference on Thursday.

"Proceedings will be opened against Spar, in court, and presumably for defamation," Gergely Gulyas said. Spar did not immediately respond to a request for comment.

The Austrian government and Spar sent letters to European Union commissioners in March saying that a special tax introduced in 2020 discriminated against foreign retailers in Hungary, and was therefore in breach of EU law. The European Commission said on April 5 that it was looking into the complaints and will "ensure appropriate follow-up".

Taxes on retailers in Hungary have increased to as much as 4.5% of revenue since the government announced the special tax, Spar Austria CEO Hans Reisch said in the letters dated March 4, 11 and 20. "Foreign-owned retailers, including SPAR Hungary... face the highest tax bracket of the special tax," Reisch wrote in a letter seen by Reuters, adding that Hungarian competitors operating in franchise chains consistently benefit from a lower tax rate up to 1%.

The tax forces foreign retailers to operate at a loss because profit margins in the retail sector are lower than 4.5%, Reisch said.

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