EU reaches deal with Hungary over Ukraine aid, tax plan and more

A deal was reached between European Union governments and Hungary on Monday to sort out financial aid for Ukraine in 2023.

EU institutions, member countries and Hungary had been haggling over the deal for months now and it was finally spelt out on Monday by the European Council. Under the deal, Ukraine will get 18 billion euros from the EU budget next year.

Hungary also agreed to drop its veto over the OECD-agreed global minimum corporate tax of 15 per cent to be applied to large international corporations where they make money, rather than where they set up offices for tax purposes.

If Poland withdraws an objection it has to the policy by Wednesday, the OECD minimum tax will become an EU law.

In exchange for the deal, Hungary's plan for how to spend 5.8 billion euros of EU recovery funds will be approved. However, Budapest needs to meet several conditions to get the money.

In case the spending plan hadn't been approved by the EU by the end of the year, Budapest would have irrevocably lost 70 per cent of the total.

The amount of EU funds for Hungary that the European Commission wanted frozen was also reduced to 6.3 billion euros from 7.5 billion euros.

The 6.3 billion euros amounts to 55 per cent of EU cash that Hungary is due to receive until 2027 from the EU budget. This was aimed at reducing differences in living standards with richer members of the 27-nation bloc. The Commission wanted to freeze 65 per cent of the money.

(With inputs from agencies)

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