The service provider who raised fees concurrently to the decrease of internet-related VAT was fined

Published: 25 April 2017

The Office of the NMHH levied a HUF 300,000 fine on Kapulan Távközlési Kft. for failing to modify the final amount of invoices pertaining to the decrease of VAT of internet services and for disregarding the rules on contract amendments related to electronic communication.

As commonly known, the VAT of internet access services has been decreased from the previous 27% to 18% as of 1 January 2017. The Office conducted a supervisory procedure based on a notification, in which it determined that although Kapulan Távközlési Kft. decreased the amount of VAT to 18% on the invoices it issued subsequent to 1 January 2017, it concurrently raised the net monthly fee of its services by listing exactly the same gross amounts on its invoices issued after 1 January as those from December 2016.

According to the statement of the service provider, it made no contract amendments due to the simultaneous decrease of VAT and the increase of monthly fees since the gross monthly fees remained unchanged.

However, the authority determined that the service provider modified the subscriber contracts by unilaterally changing the terms and conditions of the service (and thus the content of the legal relationship) by modifying the net monthly fee of the internet service and the amount of its VAT.

The Authority concluded that the raise of the monthly net fee on behalf of the service provider constitutes a breach of contract even if this resulted in no – textual – changes to subscriber contracts with the same gross monthly fees. The reason for this is that the service provider unilaterally modified the integral terms of the contract – the prices. In light of the above, the service provider should have fulfilled its obligations under the electronic communication laws pertaining to contract amendments – in particular, concerning the stipulations on the notification of subscribers and their rights.

Due to the violation of the laws on contract amendments, the authority validated the legal consequences laid down in the act on electronic communication, issuing a statement in which it levied a HUF 300,000 fine on Kapulan Távközlési Kft., as well as obliging the firm to modify the subscriber contracts in the future in accordance with the law. The ruling is not final.