Poland supports EU deal on Pillar Two global tax; Hungary blocks it

Poland backs EU deal on global tax, while Hungary blocks it during an Economic and Financial Affairs Council meeting. Hungary withdraws its support citing concerns over the economic impact of the Ukrainian war and uncertainties about the minimum tax’s early introduction. France expresses disappointment, highlighting Hungary’s previous backing. The directive demands unanimous approval from all member states.

In a turn of events at today’s Economic and Financial Affairs Council meeting (17 June 2022), Hungary has withdrawn its support for the proposed EU directive to implement Pillar Two of the OECD’s global minimum tax. Poland, which was the only country with reservations so far, announced its support for the compromise text – the third compromise text by the French candidacy (published 16 June 2022) since the start of the negotiations at ECOFIN.

Hungarian Finance Minister Mihaly Varga explained his position by referring to ‘critical voices’ within the Hungarian Parliament. The parliament’s concerns related to the economic impact of the Ukrainian war, and the uncertain consequences that would flow from the introduction of the minimum tax at such an early stage.

In response, French Finance Minister Bruno le Maire said that Hungary had already supported the proposed directive at previous ECOFIN meetings.

The withdrawal of support by Hungary was expected, following earlier statements by the Hungarian parliament.

The directive requires the unanimous support of all EU member states to become law.