• Coronavirus in Hungary
  • Budapest
  • Hungary border control
  • HelloMagyar
Corruption and the residency bond scheme in HungaryCorruption and the residency bond scheme in HungaryCorruption and the residency bond scheme in HungaryCorruption and the residency bond scheme in Hungary
  • Politics
  • Business
  • Society
  • Sport
  • Culture
  • Special Hungary
  • News To Go
  • World
  • Contact Us
  • About us
  • About us
  • Contact Us
  • Privacy Policy
✕
Support us
Fanni Grajzel Fanni Grajzel · 22/03/2017
· Business

Corruption and the residency bond scheme in Hungary

corruption European Union money residency bond
euro

The Hungarian residency bond program appears to be the textbook example for legal and systematic corruption, writes mno.hu based on the study of Transparency International Hungary and Investment Migration Council.

The study, mainly made by Boldizsár Nagy international lawyer and professor at Central European University and Eötvös Loránd University, shows that the residency program has nothing to do with financing the state’s debt or with the investment visa programs abroad.

One of the most important rules of debt financing is to sell the bonds at the lowest price, that is, at the lowest interest possible. The Hungarian residency bonds, however, are too expensive, and their interest is four times as much as the market interest rate. This is because the parliament agreed on putting a guaranteed 2% yield into law. Other state bonds do not have a law-regulated interest rate, though.

The visa program of other countries honour an economic activity with residing permission or the granting of citizenship, which provide a significant amount of money to the state and encourage the creation of new jobs. The foreigner is also required to buy a property of great value and actually reside there during the year for some time.

Button

The Hungarian program, on the other hand, does not even require the presence of the foreigner in Hungary. Moreover, it does not even bring money to the country, only lends some, after which the country pays public funds as interest. Thus, the offshore companies distributing the residency bonds are the participants who benefit from the deal.

They get to register the bonds worth of 300 thousand EUR, receive the service charges of 45-60 thousand EUR paid by the foreigner, and receive an interest of 29 thousand EUR paid by the Hungarian tax-payers. This means that, by selling a bond of about 301 thousand EUR (93 million HUF) these companies get a profit of about 30%, 74-90 thousand EUR (23-28 million HUF).

This profit is a hundred times more than the average profit gained on the state bond market, as the global participants, such as Deutsche Bank and Goldman Sachs, get a profit of 0.3%. The program has been going on for almost four years, during which period 4700 bonds were sold. But if we count the family members of the buyers, altogether about 16 thousand non-EU citizens were granted permanent residency permission in Hungary and free movement within Schengen, by the government.

Thus, the offshore companies gained about 3.72-4.21 million EUR (114-130 billion HUF) profit, of which 136 million EUR (42 billion HUF) is regarded public fund, thanks to the program. Only one of the companies was registered in Hungary, while the others were in offshore heavens; hence, they most probably do not pay taxes in Hungary.

Ce: bm

Source: mno.hu

corruption European Union money residency bond
Share
Fanni Grajzel
Fanni Grajzel

Related posts

Hungary Ryanair Airline Tax
16/08/2022

Government may not stop until Ryanair leaves Hungary – here is why


Read more
kálvin square m5 metro line
15/08/2022

Check out these breathtaking visual designs of the M5 metro line! – PHOTOS


Read more
martfű termál spa
15/08/2022

Dramatically high overheads: this thermal spa operates on a limited basis


Read more

Leave a Reply

Your email address will not be published. Required fields are marked *

SUPPORT US

Subscribe to our newsletter

Sign up to receive daily updates, news & stories about Hungary!

Select your location below or enter your country so we can deliver our morning newsletters to you in time.


Thank you!

You have successfully joined our subscriber list.


.


Latest news
  • Ministry: Estonian politicians made “unacceptable” remarks criticising Hungary
  • What happened today in Hungary? – August 16, 2022
  • Hungarians may baulk a Huxit decision of the parliament on referendum
  • Attention! Wizz Air suspends several flights in the winter
  • Monkeypox vaccine arrived in Hungary
  • 18+ VIDEO: Belgian man was nearly beaten to death at Budapest’s Sziget
  • Survey: Hungarians more optimistic about future than French, Italians
  • Government may not stop until Ryanair leaves Hungary – here is why

About us

Contact us

© 2022 DailyNewsHungary. All rights reserved!