Yes from Budapest on aid to Kiev and the minimum tax, EU ok for disbursements

Listen to the audio version of the article

From our correspondent – Brussels. In a last-minute compromise, Hungary has fallen back on track, giving its green light to financial aid for Ukraine worth €18 billion and in return getting its partners to agree on its recovery plan and resilience. The agreement closes, at least temporarily, a serious dispute between Brussels and Budapest, and also allows the European Union to adopt the international agreement on the minimum taxation of multinationals.

The financial package in favor of Kiev will consist of ten-year loans (see Il Sole 24 Ore of 9 November). In exchange for Hungary’s decision to lift its veto on aid to Ukraine, its European partners have given the expected green light to Hungary’s recovery and resilience plan worth €5.8 billion. They also reduced the amount of cohesion funds which will remain frozen until Budapest introduces a series of measures to address doubts about the rule of law in the country (the total drops from the 7.5 billion proposed by the Commission to 6, 3 billion euros).

Finally, the last piece of the compromise, Hungary also lifted its veto on the provision that allows the European Union to adopt the international agreement on the minimum taxation of multinationals. The directive provides for common rules in calculating the minimum effective rate of 15%, decided by 137 countries at the OECD level.

The other piece of the provision remains to be negotiated, ie the formula for calculating the percentage of taxable profits in each relevant jurisdiction.

The agreement between the Twenty-seven closes age-old issues, some of which have been open for some time (see Il Sole 24 Ore of 7 December). At the same time, the affair has highlighted Hungary’s habit of vetoing. Already in the past, in 2021, Budapest had blocked two community declarations, one relating to China and the other relating to the violence between Israelis and Palestinians. The country then repeatedly complicated the adoption of sanctions against Russia, in the wake of the war in Ukraine.