The reason is the concern that EU money will be misappropriated in Hungary due to inadequate fight against corruption. The decision is part of a package of four decisions that include extensive aid to Ukraine and a directive to implement the international minimum tax for large companies.
After a delay, the EU countries decided to freeze billions in payments from the Community budget intended for Hungary. As announced by the Czech EU Council Presidency, the written procedure was completed on Thursday with the necessary majority. Due to concerns that EU money is being misappropriated in Hungary due to inadequate fight against corruption, 6.3 billion euros are to be blocked – an unprecedented step.
The decision is part of a package of four resolutions that should actually be completed on Wednesday. This includes a resolution for extensive aid to Ukraine and an important directive on the implementation of the international minimum tax for large companies. At the last minute, however, Poland had announced the need for a review of the minimum tax.
The aim of the minimum tax is to prevent corporate profits from being shifted to tax havens. International companies with at least 750 million euros in sales per year should pay at least 15 percent tax, regardless of where they are based. The Ukraine aid is about making loans of up to 18 billion euros available to the country attacked by Russia next year via the EU.
Since both decisions have to be taken unanimously, Hungary was able to block them for weeks. That deadlock was resolved earlier this week, according to EU diplomats, with countries like Germany threatening to block approval of Hungary’s plan to use EU coronavirus aid.
This would have meant that at the end of the year 70 percent of the available EU funds of 5.8 billion euros were irrevocably forfeited. The confirmation of the Corona plan is the fourth part of the package that was decided on Thursday. However, payments should only be made if a total of 27 requirements, for example to fight corruption, are met.