Hungary threatens to block an agreement on an EU minimum rate of profit tax for large multinationals. Just as Poland seems to be ceasing its opposition to the intended EU directive after months, Budapest suddenly raises all kinds of objections.

 

All 27 Member States must agree to the introduction of the envisaged minimum rate of 15%.

EU finance ministers are expected to reach an agreement in Luxembourg on Friday after signals that Poland is withdrawing its veto. According to insiders, Minister Magdalena Rzeczkowska gives the green light because the European Commission approved Poland’s corona recovery plan, a year after Warsaw submitted it. In principle, this gives the country access to 36 billion euros in grants and loans.

But now the Hungarians are threatening a blockade. According to the French chairman of the council meeting, minister Bruno Le Maire, strong negotiations have been going on behind the scenes since Friday morning to win over Budapest, which is also awaiting approval of its corona recovery plan. “I’m not giving up on this,” he said before the meeting began.

The envisaged European directive is based on an agreement between nearly 140 countries on a major reform of the international tax system, to combat tax avoidance and evasion. It states that multinationals with an annual turnover of 750 million euros or more are not allowed to pay less than 15 percent tax anywhere in the world. The multinationals have to start paying in the countries where their customers are located, and not just in the country where the head office is located.