CJEU judgment delivered on the carbon emissions allowance tax

On 16 April 2026, the Court of Justice of the European Union (CJEU) delivered its judgment on the compatibility of the Hungarian carbon dioxide emissions allowance tax with EU law, finding that the Hungarian regulatory framework is contrary to the rules governing the EU Emissions Trading System (EU ETS). The judgment may represent a significant milestone for those market participants who, in recent years, have been subject to the obligation to pay a carbon dioxide emissions allowance tax and/or a transaction fee.

I. The Decision of the Court of Justice of the European Union

In the context of a preliminary ruling procedure initiated in a case involving a specific taxpayer, the CJEU examined the Hungarian regulation on the carbon dioxide emissions allowance tax. In its judgment, the Court held that national legislation which imposes an additional tax burden on economic operators that receive a significant amount of emissions allowances allocated free of charge may be incompatible with the EU ETS Directive, where such a tax neutralises the compensatory effect of the free allocation and runs counter to the EU objectives of preserving competitiveness and preventing carbon leakage.

According to the Court, where a measure adopted by a Member State substantially withdraws this economic advantage, it may jeopardise the proper functioning of the EU ETS and undermine its incentive mechanisms.

II. Significance of the Judgment from the Perspective of Hungarian Regulation

In light of the judgment, serious questions arise as to the sustainability of the current Hungarian regulatory framework. While the judgment of the CJEU does not directly annul the Hungarian legislation, it provides binding guidance for national courts, which are required to adjudicate pending cases in compliance with the conclusions set out in the judgment.

III. Possible Next Steps for the Affected Companies

On the basis of the judgment, market participants who were subject to payment obligations under the current regulatory regime may be entitled to seek reimbursement of previously paid carbon dioxide emissions allowance tax and transaction fees.

At the same time, the possibility of recovery raises a number of procedural and strategic issues, including in particular:

• the issue of the exact applicability of the judgment / whether national courts still need to
• the procedural avenues through which the claim may be enforced;
• the periods to which reimbursement claims may extend;
• the interest that may be claimed in connection with any repayment; and
• the documentation required to successfully substantiate the claim.

Given the potentially significant financial implications for the affected companies, the involvement of expert advisors is recommended in order to support the reimbursement process.

Should the possibility of recovering previously paid carbon dioxide emissions allowance tax or transaction fees be relevant to you, please do not hesitate to contact our expert colleagues, who will be pleased to assist in preparing and pursuing the necessary claims and procedures.