The centre-right Tisza Party, led by the telegenic former teacher and activist Peter Magyar, won 53.5% of the popular vote and captured 138 of the country’s 199 parliamentary seats. That is a two-thirds supermajority, the kind that lets a government rewrite constitutional rules if it chooses to. For a country that had grown accustomed to democratic backsliding and institutional decay, the result was genuinely seismic.

But elections are easy compared to governing. Peter Magyar now inherits an economy that is, to put it plainly, a mess. Hungary barely grew in 2025, expanding at just 0.4%, one of the weakest performances in the entire Central and Eastern European region. The government is spending far more than it collects.

Billions of euros in EU funds have been frozen because the previous administration refused to clean up its institutions. A massive influx of foreign investment in electric vehicle factories is running into serious trouble. And the banking sector, which should be a pillar of economic stability, is being squeezed so hard by taxes that its profitability is shrinking.

None of this is impossible to fix. But fixing it will require juggling several extremely difficult tasks at the same time, with very little room for error.

The EU money problem

The most urgent item on Magyar’s to-do list is unlocking somewhere between 18 and 19 billion euros that the European Union has been sitting on because of concerns about rule-of-law violations and corruption under the Orban administration. To put that number in perspective, it represents roughly 11% of Hungary’s entire annual economic output. For a country with a stretched budget and sluggish growth, that money is a lifeline.

The political obstacle to accessing those funds has essentially disappeared with Viktor Orban’s defeat. The EU, which was deeply frustrated with Budapest for years, now has a willing partner in Magyar’s pro-European administration. But the removal of the political obstacle has simply revealed the next one, which is execution.

The European Recovery and Resilience Facility, the main mechanism through which a significant portion of this money flows, has a hard deadline at the end of August 2026. That means the new government has only a few months to legislate the required reforms, implement them credibly, and convince Brussels that the changes are real rather than cosmetic.

That is an extraordinarily tight timeline for any government, let alone one that is just getting on its feet. Bureaucracies do not transform overnight. Institutions that were built to serve one set of political interests do not simply flip a switch and become transparent and accountable. If Hungary misses this window, the consequences are severe. The government would have to impose painful spending cuts to fill the gap, the kind that would hurt ordinary people, derail the modest economic recovery that analysts are projecting, and rapidly erode the political goodwill that Peter Magyar’s landslide victory has temporarily provided.

Bond markets have already signalled cautious optimism. After the election results came in, money started flowing back into Hungarian sovereign debt, with investors pricing in the expectation of lower risk, a cleaner business environment, and restored fiscal credibility. The long-term prize, Euro adoption, is also back on the table now that the new government is genuinely pro-European. But all of that optimism is conditional. It evaporates quickly if the government fumbles the EU funds question.

An economy walking a tightrope

Even if the EU money comes through, Hungary faces a structural fiscal challenge that will not be resolved by a single capital injection. The government deficit is expected to reach 5.1% of GDP in 2026, up from an already elevated 4.6% the previous year.

The EU has formally flagged Hungary through what is known as the Excessive Deficit Procedure, essentially placing the country on a watchlist and demanding corrective action. The Hungarian Fiscal Council calculated that a spending adjustment worth 1.7% of GDP was needed to comply with European fiscal rules, and that estimate was made before things got even worse. By February 2026, the deficit had already burned through roughly half its full-year budget, largely because the outgoing Orbán administration spent lavishly in the run-up to the election.

The pre-election giveaways were considerable. The minimum wage was raised by 11% at the start of 2026. Mothers with multiple children received a lifetime income tax exemption. A fourteenth month of pension payments was disbursed. Bonuses were handed out to military and law enforcement personnel. Housing support packages were extended to public sector workers. Every one of these measures costs real money, and none of it was properly funded. The incoming government is now stuck with the bill.

Here is where things get politically complicated. Peter Magyar campaigned on promises of his own, including cuts to value-added tax, lower taxes on low-income workers, and the preservation of pension and family support programmes. Those are popular commitments. But making good on them while simultaneously reducing a deficit that is already too large requires a level of fiscal creativity that borders on the miraculous.

Something will have to give, and the new government will have to decide fairly quickly what that something is. If it pursues austerity to satisfy Brussels, it risks alienating the voters who just handed it a historic mandate. If it keeps spending, it risks losing the EU funds and spooking the bond markets that are currently giving it the benefit of the doubt.

The projected economic recovery, real GDP growth of 2.3% in 2026, rising modestly to 2.1% in 2027, is real but fragile. It is being driven largely by consumer spending, fuelled by those pre-election wage increases and government transfers. Exports are also expected to pick up as new automotive factories come online and German industrial demand recovers. But inflation remains sticky.

Consumer prices are expected to ease from 4.5% in 2025 to around 3.6% in 2026, but the National Bank of Hungary is keeping interest rates elevated at around 6.25% to make sure inflation does not reignite. Higher borrowing costs are fine for controlling prices, but they make it more expensive for businesses and homeowners to borrow, which dampens investment and economic activity.

The banking squeeze

Hungarian banks have had a rough few years, and 2025 was no exception. The sector’s combined after-tax profits fell by 8% to just under 1.5 trillion Hungarian forints, a direct result of an aggressive tax regime that the Orbán government imposed and repeatedly extended.

The total additional tax burden on Hungarian banks in 2025 amounted to roughly 830 billion forints, composed of a financial transactions fee that surged 31%, an extra-profit tax that climbed 29%, and special sectoral levies that rose by 18%.

The original justification for these taxes was that banks were making windfall profits thanks to the high-interest-rate environment that came with the inflation crisis. The argument had some surface logic to it. When the central bank raises rates sharply, commercial banks typically see their net interest margins widen, meaning the gap between what they pay depositors and what they charge borrowers grows. The government’s position was that this passive profit boost should be partially redirected to the public finances.

The problem is that what was sold as a temporary emergency measure became permanent. Banks have now been operating under this heavy burden for several years, and the effects are visible. Return on equity has fallen. Banks have become more cautious about lending.

Capital that could have been deployed into business loans or mortgages has instead been transferred to the state. The financial sector’s ability to fund the industrial expansion that Hungary desperately needs is being constrained.

To cope, banks have been cutting costs aggressively, primarily by closing branches. The network shrank from 1,401 locations to 1,300 in a single year. But interestingly, overall employment in the sector actually rose, from around 39,800 to 40,500 workers.

That tells you where the money and energy are going. Banks are investing in technology, hiring data scientists, software engineers, cybersecurity professionals, and compliance specialists, while shrinking the frontline retail workforce. Mobile banking, AI-driven risk assessment, and automated customer service are replacing the branch teller.

This digital pivot isn’t a mere cost-saving exercise. Research on banking systems in emerging markets consistently shows that banks which embrace digital infrastructure can reduce their reliance on expensive external debt funding and manage liquidity more efficiently. For Hungarian banks, technology is partly a lifeline in an environment where traditional profitability is being taxed away.

The new government has signalled awareness that the banking tax regime needs to change. Unwinding those levies would immediately improve bank capitalisation, lower the cost of credit for businesses, and stimulate the corporate lending that drives private sector investment. But here again, the government faces a dilemma. Every forint of tax revenue it gives back to the banks is a forint it needs to find somewhere else to plug the fiscal hole.

The EV factory dream

One of Hungary’s biggest economic bets over the past decade has been attracting foreign investment in electric vehicle manufacturing and battery production. The logic was sound. Europe is transitioning away from combustion engines. Batteries are the critical component of the new automotive era. If Hungary could position itself as the battery capital of Europe, it would secure high-value manufacturing for decades.

The results have been impressive on paper. Hungary captured 47% of all Chinese electric vehicle-related foreign direct investment entering the European Union in 2023.

Two projects have become symbols of this strategy. Contemporary Amperex Technology Co. Limited, better known as CATL, the world’s largest battery manufacturer, is building a 7.3-billion-euro gigafactory in Debrecen. BYD, the Chinese electric vehicle giant, is constructing a 4.64-billion-euro manufacturing plant in southern Hungary.

The reason Chinese companies are so keen to invest in Hungary is partly about access. The European Union has imposed tariffs of up to 27% on electric vehicles imported from China, and the American market is essentially closed to them. By manufacturing inside the EU, Chinese firms can sell their products as European-made and sidestep those barriers. Hungary, under Viktor Orban, was a particularly welcoming host, offering generous subsidies and asking few political questions.

Under Peter Magyar, the political equation has shifted somewhat. But the deeper problem with these investments is not political. It is structural. BYD has already delayed the start of mass production at its Hungarian factory until late 2026, and the plant is expected to operate well below its initial capacity targets for at least the first two years.

More troublingly, BYD is simultaneously developing a separate one-billion-euro factory in western Turkey, where labour costs are lower, and production is expected to hit 150,000 vehicles annually by 2027. Hungary simply cannot compete on labour costs with Turkey, and its workforce is already stretched thin. This points to a vulnerability at the heart of the investment model. Hungary has attracted enormous amounts of capital, but much of it is in the form of assembly operations rather than genuine centres of research and innovation.

Chinese companies have historically brought their own workers with them, as CATL did in Germany, where 40% of factory staff were imported from China, rather than training and employing local people. Without requirements to share technology or develop local supply chains, Hungary risks becoming a sophisticated screwdriver factory, assembling components that are designed, engineered, and largely produced elsewhere.

The new government needs to insist on more. That means pushing for technology transfer agreements, mandating local supplier development, requiring meaningful research and development investment, and creating conditions where Hungarian engineers and scientists can genuinely participate in the innovation, not just the assembly. Otherwise, the moment production can be done more cheaply somewhere else, those factories will move.

The digital economy

Hungary’s digital sector is larger and more sophisticated than many people outside the region realise. It accounts for about 6.7% of the country’s total economic output, worth approximately 31.5 billion US dollars in 2025.

The country is a European leader in broadband infrastructure, with 37% of households connected to gigabit-speed internet in 2024, more than double the EU average of 18%. The national strategy aims for 95% gigabit coverage and 90% of public services delivered digitally by 2030.

In advanced manufacturing, the adoption of “Industry 4.0” technologies, which encompasses smart sensors, real-time data analytics, digital twin modelling, and AI-assisted quality control, is transforming what Hungarian factories can produce and how efficiently they operate.

The story of TDK Electronics, a major global manufacturer, illustrates the shift vividly. The company replaced its legacy systems, which included fax machines and isolated software programmes running on outdated computers, with unified digital manufacturing systems that allow managers to monitor and adjust production in real time. The efficiency gains were substantial.

Hungary has also made genuine progress in artificial intelligence (AI) research. The government-backed Artificial Intelligence National Laboratory recently completed a five-year programme involving eleven research institutions. The results included breakthroughs in predictive maintenance for factories, the development of language models specifically optimised for the Hungarian language, and research into autonomous robotics. The follow-up programme, backed by a budget of 20 billion forints, is explicitly designed to turn these research outputs into commercially viable products within three to four years.

Pharmaceutical and biotech companies are emerging as one of the more exciting growth areas. Firms like “Avidin Ltd,” which uses AI to identify cancer drug targets, and “ChemPass,” which develops AI-assisted discovery platforms for new medicines, represent exactly the kind of high-value intellectual property creation that Hungary needs more of.

These are companies that are not easily relocated to cheaper jurisdictions, because their value lies in people’s knowledge, networks, and accumulated research, not in physical assembly capacity.

The main gap in Hungary’s digital story is at the level of small and medium-sized businesses. While the country’s large manufacturers and financial institutions are digitally sophisticated, many smaller companies have been slow to adopt even basic tools like cloud software, digital invoicing, or enterprise resource planning systems.

Some of this is cultural caution. Some of it is cost. Some of it is the result of regulations, including strict data sovereignty laws, that make cloud adoption complicated. Bridging this gap is critical to raising the country’s overall productivity and ensuring that smaller businesses can remain relevant as supply chains become increasingly digital.

The energy transition

Hungary’s solar energy story is one of the more striking examples of policy-driven transformation anywhere in Europe. The government originally set a target of six gigawatts of installed solar capacity by 2030. That target was surpassed by 2025, when capacity exceeded nine gigawatts. The new target is 12 gigawatts, and analysts expect it to be met comfortably.

The success has, however, created new problems. Solar power is inherently intermittent. It generates electricity when the sun shines and nothing when it does not. Hungary’s grid was not designed to manage a system where a huge proportion of generation can disappear on a cloudy day or overnight.

Onshore wind, which would provide a useful complement to solar because it tends to blow when the sun is not shining, has been virtually frozen for a decade due to zoning restrictions. Geothermal energy, which Hungary has a significant natural capacity for, remains largely undeveloped.

The result became painfully obvious during the severe cold period in January 2026, when demand for electricity hit record levels and the grid struggled to cope. The lesson is clear. Hungary needs to invest heavily in battery storage, grid upgrades, and diversification of its renewable energy mix, including wind and geothermal, before the next crisis arrives. The government has put incentive frameworks in place, including tax credits worth 30% of eligible investment costs for battery storage projects, but turning policy incentives into built infrastructure takes time.

What comes next

The Magyar administration faces an exceptional set of challenges simultaneously, each one difficult enough to occupy a government’s full attention on its own. It must unlock billions in frozen EU funds, stabilise a budget that is significantly over its limits and reform the tax environment strangling the banking sector.

It must upgrade its foreign investment strategy from assembly-line attraction to genuine innovation partnerships. It must close the digital divide between large companies and smaller businesses. And it must fix an energy grid that is increasingly unable to handle the very renewable energy it has successfully encouraged.

The decisions made in the next twelve months will shape Hungary’s economic trajectory for the better part of a decade. The foundations are there. The goodwill is there. What is needed now is execution.

The post Hungary turns page after Orban appeared first on International Finance.

Its proprietary trading platform, Trader Workstation (TWS), is one of its most notable features. It provides traders with a wealth of advanced tools and features to execute trades across a variety of asset classes, such as stocks, options, futures, forex, and bonds. TWS is a top option for active traders who need powerful trading capabilities, because it offers complex order types, real-time market data, customisable layouts, and sophisticated charting tools.

In addition to its flagship platform, Interactive Brokers provides a variety of trading tools and platforms, including IBKR Mobile for mobile trading and IBKR WebTrader for web-based trading. These are designed to accommodate varying trading styles and preferences. Interactive Brokers’ global reach is another important factor in its appeal, with access to over 135 markets in 33 countries and 23 currencies. This enables traders to easily diversify their portfolios across international markets.

Additionally, Interactive Brokers is well known for its competitive pricing structure, which offers tight spreads and low commissions, especially for high-volume and active investors. Because of its cutting-edge trading technology and economical approach, Interactive Brokers has become the go-to option for traders looking for efficiency and value in their trading endeavours.

In addition to trading services, Interactive Brokers offers a variety of study aids and educational materials to assist traders in making wise investment choices. These resources include webinars, analyst reports, market commentary, and instructional videos on a range of trading and investing-related subjects. Moreover, Interactive Brokers places a high priority on security and regulatory compliance, putting strong safeguards in place to protect client funds and guarantee that industry rules are followed.

All things considered, Interactive Brokers distinguishes itself as a top brokerage company by providing all-inclusive trading solutions, access to international markets, competitive pricing, and a dedication to providing traders with the instruments and assets required to thrive in the fast-paced financial markets of today.

The brain behind this successful venture is Thomas Peterffy, a Hungarian-born American billionaire businessman and the founder of the company.

Who is Thomas Peterffy?
• Thomas Peterffy was born in Budapest, Hungary, on 30th September, 1944
• His father shifted to the United States after the failure of the Hungarian Revolution in 1956. Peterffy left his engineering studies in Hungary and came to the country to join his father in New York in 1965.
• As he moved to New York City, Thomas Peterffy began his career as an architectural draftsman working on highway projects for an engineering firm and also volunteered to programme a newly purchased computer
• Later, he left his career designing financial modelling software and purchased a seat on the American Stock Exchange and played a role in developing the first electronic trading platform for securities
• Consistently pushing to replace manual processes with automated ones, Thomas Peterffy wrote code in his head during the trading day and then applied his ideas to computerised trading models
• He introduced handheld computers onto the trading floor in the early 1980s, and later his business related to his AMEX seat eventually developed into Interactive Brokers
• Amid his business related to his AMEX seat eventually shaping itself into Interactive Brokers, Thomas Peterffy stepped down as its CEO in 2019
• Interactive Brokers moved its European headquarters in London and outsourced its operations to two new continental centres in 2021
• Post 2021, Interactive Brokers’ Western European clients were reportedly served by an Ireland subsidiary, whereas the Central European operations were based in Budapest
• Thomas Peterffy chose Budapest as he was reportedly convinced that the Hungarian language and the “unique Hungarian logic” would result in above-average profitability, apart from the urge to pay off the debt he owed to his native Hungary
• The Budapest-based subsidiary, Interactive Brokers Central Europe Zrt., was established in Hungary and became a member of the Budapest Stock Exchange (BSE) upon its incorporation
• According to Forbes’s 2023 list of The World’s Billionaires, his net worth at USD 25.3 billion, making him the 57th richest man in the world
• In 1999, Thomas Peterffy played a significant role in persuading the Securities and Exchange Commission (SEC) that United States options markets could be linked electronically, which would ensure that investors receive the best possible options prices
• During the 2012 United States presidential campaign, he created political ads supporting the Republican Party and also bought millions of dollars of air time across the media networks
• Thomas Peterffy donated over USD 60,000 to the Republican National Committee in 2011 and USD 100,000 to a pro-Donald Trump political group during the 2016 United States presidential election
• He owns 75% of Interactive Brokers, with his net worth being estimated at USD 5.3 billion as of 2023

Interactive Brokers Composite Rating Rise

Meanwhile, Interactive Brokers’ IBD SmartSelect Composite Rating increased from 94 to 98. The updated rating indicates that the stock is performing better than 98% of all stocks in terms of the most crucial stock-picking criteria. Experts suggest, that when searching for the best stocks to buy and watch, it’s a good idea to keep a check on the grade of 95 or above since winning stocks frequently have those in the early stages of a new price run.

Interactive Brokers broke out from a 95.59 entry in a handle-free cup, and is currently outside of the buy range. With a 96 EPS Rating, the stock outperforms 96% of all stocks in terms of recent quarterly and annual earnings growth. With an accumulation/distribution rating of “A”, it indicates that institutional investors, including mutual funds and pension funds, have been buying a lot of it over the past 13 weeks.

The company reported a growth in earnings per share of 17% in Q4 of 2023. The growth in sales was only 17%, as opposed to 45% in the previous quarter. Interactive Brokers holds the number one rank among its peers in the Finance-Investment Banking/Brokers industry group. Two of the group’s top-rated stocks are Perella Weinberg Ptrs and Robinhood Markets.

The post Business Leader of the Week: Meet Thomas Peterffy, legendary Wall Street billionaire appeared first on International Finance.

Mátra’s lignite accounted for 16 percent of the country’s carbon dioxide emissions in 2016 and half of the energy sector’s pollution. A big chunk of the country’s coal and ignite basins have been closed and the number of miners has significantly reduced from 125,000 in 1965. The increasing frequency of climate change impacts had urged the European Union to triple the cost of a pollution permit in a year. In the same year, it was reported that the carbon price around €18 a tonne gave gas plants a competitive advantage over coal plants. The prices were anticipated to continue rising over the next five years from then, forcing a strong transition away from coal. Hungary is not as highly reliant on coal as some of its central and European counterparts like Poland, the Czech Republic and Bulgaria which have the highest percentage of coal plants, but the country has shown resistance to measures that could drive out the wicked fossil fuels.

The European Union carbon prices were anticipated to continue growing by an average of €35 to €40 per tonne over the period between 2019 and 2023. The country’s second national climate strategy that was approved by the parliament in October 2018 thoroughly supports three essential factors: reduce carbon emissions by replacing fossil fuels with clean energy; improve energy efficiency and develop a green economy through forestation. There was a common forecast around that time that coal-fired power plants in the country could sharply decline by 2025.

A report published by the University of Cambridge observes that energy efficiency interventions in buildings could result in greater benefits to climate targets. In Europe, buildings are responsible for 40 percent of final energy consumption and 36 percent of carbon dioxide emissions. The building sector in seven of the EU member states accounts for the lion’s share of total energy use than the European average. It has already reached 50 percent in Hungary, Estonia and Latvia and they could bring much bigger benefits than anywhere in Europe.

The combined impact of all these factors has now laid the foundation for Hungary to make its way into a booming solar business. The country’s efforts in investing in photovoltaics to meet the European climate targets is gradually getting off the ground and the market is a window of opportunity for foreign investors. It has been stipulated that the ratio of renewable energy resources must reach 30 percent by 2030 following the Paris Climate Agreement.

In truth, the country’s solar market is its biggest source of renewable strength as hydroelectric power stations are not a realistic option over its insufficient topographical relief and wind energy is not much of a viable option, especially with the Orbán government’s ban on the construction of wind turbines within a 12 km radius of populated areas. So this makes its solar market a huge electricity hog. The solar energy produced in the country is about an average of 1250 kWh/m2 per year compared to central France. The country has finally realised this potential enough to make investment plans in the construction of solar energy parks in the next decade, although the growth prospects are not entirely clear. The Hungarian National Energy and Climate Plan have made a forecast for the foreseeable future where the solar trend will increase from 700 MW in 2019 to 6645 MW by 2030.

After much thought, the country’s potential tenfold increase of the solar market is an especially iconic growth trend because of its slow action in phasing out coal-fired plants and scarcity of available funding limits linked to the high price of equipment.

Hungary to ditch coal by 2030

Hungary was one of the EU’s most coal-dependent member states, however, with the EU raising prices of lignite as a way of reducing greenhouse gases, Hungary is shifting its focus to renewables as its principal power source. The Hungarian government believes that a predicted price drop of up to 30 percent in photovoltaics gives the country the chance to meet the energy directives proposed by the EU, which states that all 28 members within the bloc must source 20 percent of their energy from renewable sources by 2020.
President Janos Ader said on September 24 at the UN Climate Action Summit in New York that Hungary will increase its solar power capacity ten times by 2030. It will stop producing energy from coal while expanding the production of nuclear power plants. He said, “Thanks to the combined effect of these three measures, 90 percent of Hungary’s electricity production will be carbon-free by 2030 and not by 2050. We will also improve the energy efficiency of our buildings by at least 30 percent by 2050. And, by 2030, we will use only electric buses in our cities.”

However, this has pushed the mining communities into a state of apprehension when it comes to their future. Many believe Hungary wants to emulate Spain in this regard. Spain also announced that it will aim to derive 100 percent of its energy needs from renewable energy sources by 2050. To achieve such a feat, the Spanish government has come up with a transition plan worth €250 million. As per the plan, the country is planning for a transition of workers in the coal industry to clean energy jobs by providing them with the right kind of training and requisite skills.
Currently, Hungary has 2000 MW of PVs installed in the country. However, it aims to increase this to 30,000 MW by 2022 in its renewable drive. This makes Hungary an attractive proposition for solar investors seeking to invest in the CEE region. With Hungary taking its commitments to renewable energy increasingly seriously, the pivot is set to be closely observed by investors.

Hungary’s energy mix

Hungarian energy supply is dominated by imports from Russia. Hungary imports around 80 percent of its gas requirements from the Russian majority state-owned multinational energy corporation Gazprom. As both domestic gas and oil production has peaked, many believe that imports will only increase from here on. However, exploring the renewable energy potential could help counter that.
The Paks Nuclear Power Plant, located 5 kilometres from the small town of Paks in central Hungary contributes significantly to Hungary’s electricity grid. It is the first and only operating nuclear power station in Hungary and it supplies approximately one-third of the country’s power. Coal remains the second biggest contributor to Hungary’s energy mix after nuclear power, accounting for 21 percent in 2014, down from 17 percent in 2010.

Nuclear power accounted for 49 percent of domestic electricity generation in 2019 in Hungary. Meanwhile, gas contributed to 23 percent of the total electricity generation, coal 15 percent and renewables 12 percent. While nuclear is expected to continue to be the primary source of energy, renewable is expected to grow in Hungary in the coming years. According to Enerdata.net, half of the gas in Hungary is consumed by households and services. The share of industry in gas consumption has increased since 2000, from 18 percent to 22 percent in 2019 (including non-energy uses), a share higher than that of the power sector (19 percent).

Hungary proposes a share of 20 percent energy from renewable sources in the gross final consumption of energy in 2030 and corresponding sectoral shares. In 2015, 10.5 percent of the gross Hungarian electricity production came from renewables, whereas around 52 percent of that amount was from biomass. Wind energy stood at 22 percent was from wind, 7 percent was from hydro-energy and solar contributed to only 3 percent of the total. However, the solar power landscape in Hungary is expected to change. While, by the end of 2015 Hungary had installed more than 110 MW of photovoltaics, by the end of 2019, Hungary had installed more than 1277 MW of photovoltaics. By the end of the third quarter of 2020, the installed solar power capacity was 1920 MW.

Hungary to reach 6 GW of solar capacity by 2030

Currently, Hungary has a solar power capacity of 2 GW, however, according to László Palkovics, Minister of Innovation and Technology in Csorna, northwestern Hungary, the government aims to achieve a three-fold increase by 2030. According to the minister, the spectacular growth of solar power generation in Hungary is attributed to the installations of solar panels on rooftops, which has led to the growth in the household solar sector. To support the growth, the Hungarian government is planning to provide non-refundable subsidies this year.

Due to its geographical position, Hungary has a large potential for solar power generation. Compared to other parts of Europe, Hungary’s average solar radiation is over 1300 KWH/m². The good news for Hungary is only a very small part of this is being tapped into. It was reported that there is a tender for more than 2 GW of capacity. Looking at the current scenario and the government’s commitment towards renewables, we can expect much more growth especially in household and small size power generation.

What Hungary wants to do is to increase the rate of carbon-free electricity production to almost 90 percent by 2030. This will be achieved by increasing activities in nuclear and solar power in the country. The minister further added that scaling up production capacity in the solar sector is also important from the aspect of industrial policy. According to him, the European countries could reach a level where they could compete with Asian countries that dominate this segment. However, to be competitive enough the European countries need new technological advancement, production of renewable energy equipment and also enough funding. Giving the example of the Ecosolifer plant, the minister said that similar projects could help Europe to reposition itself in the global market.

Over the years, many solar projects have been sanctioned in Hungary. The Ecosolifer plant was developed with a total investment was €53 million. Around €6 million of the funds came from the Hungarian government. According to its COO, Rikus Janken, the capacity of the plant may be further raised to 300 MW at a later stage.

China National Machinery Import and Export (CMC) is building central Europe’s largest solar plant in Hungary, worth €100 million. The project will support the country’s climate policy targets, including making Hungary a country that can produce energy in a carbon-neutral way by 2050.

László Palkovics, Hungary’s innovation and technology minister told the media, “The solar park will contribute to developing a well-balanced and sustainable energy mix in Hungary and guaranteeing the country’s energy security. Hungary is sometimes classified as a climate change-sceptical country, but if we look at the Hungarian people and the performance of the Hungarian economy in terms of sustainability, we have no reason to be ashamed. Hungary has reduced its carbon dioxide emissions by 32 percent since 1990, achieving the 40 percent reduction target for 2030.”

Last year, media houses also reported the completion of a 20 MW photovoltaic power plant at the town of Felsozsolca in Northern Hungary. The newly installed plant now delivers clean energy to around 8000 homes. Similarly, Hungarian state-owned utility MVM is planning to expand its solar photovoltaic (PV) footprint in the country to about 1GW. Earlier in August, its renewable subsidiary MVM Zold Generacio closed a tender for new solar PV units of 0.3 to 60MW each, with a combined capacity of 300MW.

Under Hungary’s National Energy Strategy up until 2030, the country plans to ensure the long-term security of energy supplies and increasing the share of renewable sources such as solar in its energy mix. The strategy also points out the importance of fossil fuels for future generations. Besides boosting renewable energy capacity, the central European country also plans to boost its nuclear energy capabilities as well. The National Energy Strategy further notes that the construction of new power plants will be required to replace those that will become obsolete in the future.

Investor’s optimistic about Hungary’s solar market

In the Renewable Market Watch’s yearly updated ‘Attractiveness index for solar photovoltaic (PV) energy investments in CEE and SEE countries in 2020, Hungary is ranked among the top 10 countries when it comes to attractiveness for solar photovoltaic (PV) energy investments. The very fact that Hungary is focused to meet the growing need for power in the country through renewables and reduce its carbon footprints makes the country an investment hotspot. Notably, Hungary is also one of Europe’s biggest coal consumers. Hungary plans to increase solar panels to 30,000 MW by 2022, making the country a magnet for solar investors.

Budapest’s current solar power capacity is around 500 MW and the capital city wants to boost it to 3,000 MW by 2022. The country plans to replace coal with alternatives such as nuclear and renewables. Another factor that makes Hungary a hotspot for renewable investment is the fact that the number of sunny hours in Hungary is between 1,950 and 2,150 per year. If the potential is tapped into, the country could generate a huge amount of energy which could equal several tens of thousands of MW. Investors across the globe understand Hungary’s potential and as authorities sanction projects in the future in this regard, we could see a rush from green investors to put their money in renewable projects in Hungary.

The post Why Hungary’s power market is a hotspot? appeared first on International Finance.

Nevertheless, Big Data isn’t going away. While Silicon Valley is receiving a global scolding for its presumption (not least by the EU) in reorganising civilization on the basis of Facebook ‘likes’, tax authorities (not least in the EU) continue to view automatic electronic data capture as the key to a future of effective tax collection.

This July, Hungary introduces real time VAT reporting. Details of all B2B transactions with a Hungarian VAT amount equal to or greater than 100,000 forints (approx. €320) will need to be reported immediately and electronically to the Hungarian tax authorities. Though the primary target of the measure is domestic Hungarian businesses, many EU (and UK) companies selling into and operating in Hungary will be affected.

We are fast approaching the implementation date, but definitive details of reporting requirements are not yet available. Nonetheless, technical challenges for business will be significant; as soon as the relevant invoice is raised, its data must be automatically transmitted to the tax authority. (Is your system set up to do that?) Hungary intends to operate a strict penalty regime for backsliders. The numbers are eye-watering: anything up to €1600 per non-compliant invoice.

Hungary is following the example of Spain, which brought in Immediate Supply of Information (also directed at VAT collection) last year. But whereas Spain had postponed the start date of ISI because of protests from business, Hungary — an altogether more severe political and fiscal entity — is expected to push on through any resistance. The combination of uncertainty and aggression creates jeopardy for businesses; it would be unwise to ignore the issue.

In any case, in the medium term if not before, it is likely that various forms of real time VAT reporting will force themselves on the attention of all EU businesses, irrespective of their wishes. Most EU member states are actively considering implementation, and the departing UK is starting with VAT in its Making Tax Digital programme, due to be rolled out next year. Data will be piled on data: for the foreseeable future, electronic reporting will run in parallel with the filing of traditional VAT returns. (And maybe permanently, as tax authorities will be extremely wary about surrendering any source of information). It will be crucial for businesses to ensure that the outputs of these various reporting schemes agree with each other; there is the data, and there are the facts and interpretations behind the data: it all must flow together.

Italy intends to roll out a related real time electronic invoicing scheme in January 2019. The Italian regime differs from Spain and Hungary in that the invoice won’t be sent to the tax authority just for the purposes of reporting – it is sent at the issuance stage to the tax authority who checks the invoice data, verifies it, and only then sends it on to the customer, on behalf of the supplier. This is known as a ‘clearance model’, under which tax authorities audit and monitor transactions in real-time. It is used in Turkey and some Latin American countries.

The driver for real time reporting is increased revenue collection and improved fraud prevention. VAT is the fastest growing source of revenue for EU member states; they are desperate to keep control of it, and determined not be left behind by the accelerating digital economy. The annual EU VAT gap (the difference between VAT due and VAT collected) is c. €150-170B. The European social model depends on keeping the VAT gap in check. Hungary itself generates more than half its revenue from indirect taxes, and has a successful history of closing its VAT gap through major technical interventions. Real time reporting is an extension of that policy.

VAT may have originated in Europe, and colonised the world, but real time VAT reporting is an import to Europe from Latin America: it was developed to address chronic unsustainable VAT gaps in the region. Spain, with its close ties to the area, was the natural early adopter of the new digital tax culture.

The rapid implementation of real time reporting may suit individual EU member states, but what of Europe as a whole? How will consistency and coherence be maintained across the EU27?

In truth, real time reporting sits extremely uneasily with the European Commission’s own VAT collection and fraud prevention plans. The European Commission’s argument has always been that the best defence against fraud is tax authority cooperation and cross-border process harmonisation. This is, for example, the thinking that dominates the Commission’s recent VAT Action Plan, with its ambitious scheme for a ‘definitive’ EU VAT framework. But member states suspect a power grab on the part of Brussels, and in any case doubt whether the Commission could ever implement a workable system in a reasonable timeframe. As the EU VAT Commissioner has herself recently admitted, the pace of technological change keeps on making large scale bureaucratic solutions immensely difficult. The Commission is forever responding to the problems of the previous decade.

Real time reporting, by contrast, is being implemented completely differently in Hungary to how ISI was in Spain; and Italy and the UK will be different again. Indeed, we can generally expect member states to implement in ways that reflect their specific needs, rather the supposed interests of the European polity.

Digital reporting demands will increase for businesses; but obligations will be inconsistent from country to country. Companies will have to keep up with varying changing technology requirements, and, perhaps most challengingly, must develop mechanisms to deal with the more proactive interest from tax authorities that is sure to follow.      

About Nicholas Hallam:

Nicholas is responsible for overseeing Accordance’s international consulting, compliance and sales teams; defining the company’s position in a complex and changing marketplace; and developing a long-term strategy for the business.

He was, along with David Stokes and Bart O’Toole, one of the founders of Accordance, and is interested in creating and fostering a positive and dynamic working environment, where success is driven by imagination and empowerment, and relationships are built on respect.

Nicholas career-changed into VAT in 2000 after a brief period as an academic: he holds a BA and MPhil from the University of Cambridge. He is a regular attendee at the International VAT Association, and is focused on increasing public and business awareness of European VAT policy – particularly the political and commercial implications of the European Commission’s VAT harmonisation agenda. He writes regularly on European VAT, and has recently featured in The Telegraph and Accountancy magazine.

The post Technology revolutionising tax collection in Europe appeared first on International Finance.

A total of €47.4 billion was invested in European commercial property in Q3 2017 – a 13% increase on the same quarter of 2016. Inspired by the strong performance in Q3, which took European commercial investment volumes for the first three quarters of 2017 to €144.4 billion, up by 3% year-on-year, commercial property specialists, Savoystewart.co.uk sought to uncover the countries stirring the most interest in investment in Europe.

Savoystewart.co.uk found several countries experienced a spike in commercial investment in 2017. Most notably in Finland, with a total investment of €5.6 billion, Q1-Q3 – a rise of 121.60% on figures from 2016. Hungary (89.90%), Romania (73.50%), the Czech Republic (43.30%) and Netherlands (41.70%) followed, with considerable increases measured.

Though missing out on the top ten for highest commercial investment volumes, the UK received a gargantuan €37.6 billion in commercial investment, Q1-Q3 2017, which accounts to a 2.80% rise on 2016. Recovery in UK volumes has been primarily driven by the sale of large assets in London to overseas buyers, particularly in Hong Kong, including a single €1.4 billion deal – the largest noted in Q3 2017.

The UK’s position as a strong contender in commercial property should not be overlooked. Particularly as other European locations experienced catastrophic falls in commercial investment volumes, the top three identified as Ireland (-58.30%), Sweden (-38.60%) and Switzerland – with an average -35.50% fall in investment figures.

Darren Best, managing director of savoystewart.co.uk, said, “This rise and fall could reflect how investors are beginning to look toward locations outside of populist countries; places which may offer a renewed energy and stability to commercial business in uncertain times.

I believe the top ten countries will certainly be commercial locations to watch in 2018. But what is also crucial to note, is that investment in commercial property in Europe is thriving, overall – and the UK plays a large part in that.”

The post Europe a hotbed for commercial property investment, reveals Knight Frank research appeared first on International Finance.