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Executive Summary: PM Magyar confirmed that a new 2026 budget is the government's immediate priority, citing the poor state of inherited public finances. Tax reform – including review of the special progressive retail tax criticised by Austria and the European Commission as discriminatory – will follow in the medium to long term.
What happened: Speaking in Vienna alongside Chancellor Stocker, PM Magyar acknowledged the budget "is in a bad state" and said a credible 2026 budget must come first. He asked for "patience" on the special retail tax introduced by Orbán in 2020, which disproportionately affects the largest (mainly foreign-owned) retail chains. The European Commission considers the tax discriminatory. Magyar pledged to create a level playing field for local and foreign investors over time.
Why it matters: Immediate tax relief is unlikely – investors should not expect near-term changes to the retail tax regime. However, the government's stated intent to level the playing field and the Commission's existing legal position against the retail tax suggest reform is a matter of timing, not direction. The fiscal credibility of the new budget will be a key test for market and EU confidence.
Who is affected: Large retailers (especially foreign-owned), foreign investors, the European Commission, Hungarian fiscal authorities.
What to watch next: Timeline and content of the new 2026 budget; any indication of when retail tax reform enters the legislative agenda; European Commission enforcement posture.
Gábor
Pázsitka
Office Managing Partner
hungary