The European Union will check whether interest clearing between affiliated companies is justifiable in Hungary.
According to laws, it is legal in Hungary to get a tax reduction of 50% on net interests between affiliated enterprises. In fact, some multinational companies outsourced their group financing to Hungary because of this favorable law. The aim of the investigation is to find out, whether this tax rebate is in fact a form of hidden state subsidy. Still, tax reductions cannot be annulled retrospectively, tax partner of PricewaterhouseCoopers Gabriella Erdős said. It is possible that this reduction is not a state subsidy, but even if it proves to be state subsidy, the main issue is to see whether it is illegal, Erdős said. PricewaterhouseCoopers estimates the central budget has lost a total of Ft 10-20 billion ($55-100 million) tax income from these rebates. (Magyar Hirlap, Napi Gazdaság)