“The economic growth of the Central and Eastern European region is developing much more rapidly that the EU average; the region could remain the engine of European growth in the upcoming years”, Minister of Finance Mihály Varga said at a meeting of EU Finance Ministers in Luxembourg.

The meeting of the Economic and Financial Affairs Council configuration (Ecofin) also discussed cooperation  between financial authorities to combat money laundering, in addition to which a new agreement between the finance ministers could also lead to a reduction in the rate of VAT on e-books.

“The growth prospects of the countries of the European Union are good overall, with growth of over 2 percent expected during both this year and the upcoming year, and Central and Eastern Europe is one of the EU’s most rapidly growing regions”, the Minister said, highlighting the fact that according to the latest figures, Hungary has achieved a rate of economic growth of 4.8%. Mr. Varga also drew attention to the fact that, although by a minimal amount, but the performance of the 28 EU countries during the first half of the year fell below expectations, and if the trade dispute with the U.S. is not resolved then a further slowdown can be expected. In addition, both Brexit and the increase in oil prices represent a negative risk with relation to growth, he added.

“Hungary supports the reinforcement of cooperation between financial authorities in the interest of combatting money-laundering”, Mr. Varga stressed, adding that efforts to reinforce the European Banking Authority are, however, worrying in view of their overreaching nature. As he explained, Hungary cannot support a proposal that would enable the EU banking authority to make decisions concerning the operations of financial institutions that fall under a national scope of authority over the heads of member state financial supervision authorities.

Among the VAT-related issues discussed at the meeting, the Hungarian Finance Minister highlighted the fact that electronic publications will soon be taxed at a similarly low rate of VAT as traditional books. At the meeting, a final decision was also made with relation to one of the instruments used to combat tax evasion, the introduction of reverse VAT, the essence of which is that the buyer pays VAT into the treasury instead of the seller. “Hungary supports the proposal on universalising reverse VAT”, the Minister declared, but highlighted the fact that Hungary has introduced more targeted and effective measures to whiten the economy, including online cash registers to prevent the concealment of income, the electronic traffic monitoring system to prevent fictitious trade, and online invoicing from 1 July this year.

(Ministry of Finance)