UPDATE 1-EU Commission investigating Hungary's "crisis tax"

Mon Jan 3, 2011 6:47am EST

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BRUSSELS Jan 3 (Reuters) - The European Commission said on Monday it was investigating the legality of Hungary's decision to impose "crisis taxes" on a range of business sectors, as well as complaints by some companies hit by the taxes.

The Hungarian government levied the windfall taxes in October on the energy, telecommunications and retail sectors, raising a combined 161 billion forints ($809 million). The one-off taxes are due to expire in 2013.

A group of 15 companies, including major German and Austrian energy and financial firms, wrote a joint letter to the European Commission to protest the move and was backed up on Monday by German economics minister Rainer Bruederle. [ID:nLDE7020BO]

The letter was signed by chief executives of companies such as ING Group NV (ING.AS), RWE AG (RWEG.DE), Deutsche Telekom AG (DTEGn.DE) and OMV AG (OMVV.VI).

European Commission spokesman Olivier Bailly said the Commission had written to the Hungarian government in October asking for information, and had received a response even before the companies sent their complaint.

"We are now looking at the formal complaint and the letter from the Hungarian government," Bailly told reporters.

The taxes are levied on annual net revenues, and at telecoms and retail firms the rate increases progressively, with firms with bigger revenues paying sharply more.

"So far, there is no evidence that it will be extended beyond 2013," said Bailly.

Hungary said it would negotiate in 2012 with banks, retail, telecoms and energy companies about the new taxes, but will not return to the status quo seen before the crisis, Prime Minister Viktor Orban has said.

(Reporting by Pete Harrison)

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