(Bloomberg) -- Shares in Poland’s biggest retailers slid as the government in Warsaw won a challenge against the European Commission over a retail levy tax that was halted as illegal state aid.
- A ruling by the European Union’s General Court may start a debate on whether to impose the tax that was intended to boost budget revenue by as much as 2 billion zloty ($523 million) and support smaller local stores in their fierce competition against the biggest, mostly foreign-owned retail chains.
- “The decision increases chances to introduce a new tax,” which would hurt Jeronimo Martins SGPS SA, Dino Polska SA, LPP SA and CCC SA the most, Piotr Bogusz, an analyst at MBank SA, said in an email.
- The Court said that progressive taxation doesn’t “imply the existence of a selective advantage”
- Poland had sought to tax retailers that have monthly turnover of more than 17 million zloty by a 0.8% rate on sales, extended to a 1.4% rate when turnover exceeds 170 million zloty.
- “It’s negative for retailers, but a new tax may be imposed later than at the start of 2020” as the decision may still be appealed, Ipopema Securities SA analyst Krzysztof Kawa wrote in a note.
- Poland’s Finance Ministry had no immediate comment on whether the government plans to introduce the tax.
- Shares in Dino, a fast-growing food supermarket chain, drop 3.5%, the most in two weeks, while Eurocash SA retreated 1.3%.
- Jeronimo Martins, which owns the country’s biggest retail chain Biedronka, fell 3.1% in Lisbon, posting the steepest decline since Dec. 2018.
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