According to the EU Commission, Hungary is violating EU law by discriminating against foreigners at petrol stations.
The Brussels authority initiated so-called infringement proceedings against the country on Friday.
Accordingly, Hungary's measure violates the rules of the internal market.
The Hungarian regulation stipulates that owners of vehicles with foreign registration plates are not allowed to benefit from state subsidies and therefore have to pay higher prices at petrol stations.
According to the Commission, owners of Hungarian vehicles will pay 60 to 70 percent less for fuel as a result.
The government of right-wing Prime Minister Viktor Orban introduced the discount against the background of high energy prices.
The Commission called on Hungary to abide by the rules on the free movement of goods and people within the EU, including in relation to transport services.
Especially in the current situation, it is important that the internal market works in order to cushion the effects of the war in Ukraine on the economy.
Individual steps at national level and discriminatory rules are not a solution, it said.
If Hungary does not dispel the EU Commission's concerns during the course of the proceedings, the authority could take the country to the European Court of Justice.