European Court of Justice Issues Preliminary Ruling on Carbon Dioxide Taxation Under Emissions Trading System

The European Court of Justice (ECJ) April 16 issued a preliminary ruling in Case No. C-519/24, on Hungarian carbon dioxide (CO2) emissions taxation under the EU Emissions Trading System (ETS). The taxpayer, a Hungarian fertilizer producer, was subject to a national emergency tax on CO2 emissions, which was calculated by reference to emissions that were covered by significant quantities of free emission allowances allocated under the ETS, including emissions produced before the decree entered into force. The taxpayer challenged the tax through a supplementary tax return, arguing that the measure deprived free allowances of their economic value and undermined ETS ...