Hungarian PM Magyar clashes with Brussels over special tax dispute

According to Junge Freiheit, Magyar told Austrian Chancellor Christian Stöcker during a visit to Austria last week that the Hungarian budget is in poor condition and his priority is to pass a budget based on reliable data. He asked for patience on the matter.

The legal challenge has been underway since late April, when Viktor Orbán was still Prime Minister, Junge Freiheit reports. The European Commission argues the tax violates EU freedom of establishment principles because it exclusively targets non-Hungarian companies. Brussels is also examining a state aid case against Budapest.

Tax Introduced During Pandemic Targets German Retailers

The Fidesz government under Orbán introduced the special levy in 2020 during the coronavirus pandemic. Foreign retailers operating in Hungary have since been required to remit a portion of their annual revenue to the state, most recently set at 4.5 percent. Major German companies including Lidl, Aldi, and Penny are among those affected.

The tax, combined with temporary food price controls, led French retail giant Auchan to withdraw from the Hungarian market in 2024. The company’s stores were sold to domestic real estate entrepreneur Dániel Jellinek.

Magyar Promised Constructive EU Partnership

Before April’s parliamentary elections, in which Magyar’s Tisza Party secured a constitution-changing majority, he pledged to be a constructive EU partner. Under Orbán’s leadership, Brussels had frozen 33 billion euros in funding to Hungary.

EU Commission President Ursula von der Leyen is scheduled to meet with the Hungarian Prime Minister on Thursday to negotiate release of the frozen funds. Beyond demanding the rollback of Orbán’s judicial and media reforms, she is also calling for the elimination of several protectionist measures and the introduction of social reforms.

Hungary recorded a budget deficit of 4.7 percent of gross domestic product in 2025.

With information from Junge Freiheit