Popular international food chain flees Hungary due to PM Orbán and his oligarchs?

The CEO of SPAR Austria, Hans Reisch, told an Austrian news outlet that PM Orbán wanted one of his relatives to invest in the company. That is how the Hungarian government wants to take ownership of the second-biggest food chain in the Hungarian market, Mr Reisch added. As a result, they started to take out capital from Hungary.

Orbán family wants to invest in the second-biggest food retail firm in Hungary

According to economx.hu, a Hungarian business-focused news outlet, SPAR modified its operation to protect itself from PM Orbán and his oligarchs. They decided to take some of their capital to Switzerland from Hungary.

The Salzburg-centred company gave some of the management rights of their North Italian, Slovenian, Croatian and Hungarian subsidiaries to their Swiss subsidiary. In a Friday article in Lebensmittel Zeitung, an Austrian food news outlet, Hans Reisch said the Orbán cabinet harasses their company with extra taxes and price caps. Therefore, they submitted a complaint to the European Commission and modified the operation of their Hungarian subsidiary to protect it from “Orbán’s hands”.

Mr Reisch said Orbán asked them to let one of his relatives into the Hungarian branch as an investor. The long-term plan – the Austrian CEO added – is to take ownership of SPAR Hungary. He added it is not a unique problem. Last year, the European Commission highlighted in a report that Hungarian oligarchs obtained lots of foreign companies. Furthermore, the number of foreign market players complaining about the Hungarian authorities’ infringements and intimidation is growing continuously.

Here are SPAR’s extraordinary measures

Mr Reisch said they divided the Hungarian company into two parts to avoid a possible loss. They took property- and building management, retail and logistics rights from their Hungarian subsidiary and gave them to their Swiss company. Furthermore, the supermarket business is attached to their Austrian company, with which they can save EUR 10 million per year.

Foreign companies like Lidl, Spar, Tesco, and Auchan dominate the Hungarian food retail sector. The Hungarian government raised its excess profit tax on retail companies from 4.1% to 4.5%. As a result, the income of the Hungarian subsidiaries fell considerably.

SPAR complained to the European Commission

As we wrote in THIS article, the Austrian chain filed a complaint against the Hungarian government at the European Commission, saying Orbán’s tax policy violates EU laws, specifically regarding the free movement of goods. Austrian economy minister Martin Kocher and foreign minister Alexander Schallenberg supported the move.

According to economx.hu, the loss of Spar in 2023 was EUR 47.8 million. In 2022, it was only EUR 32.8 million.

SPAR confirmed to Magyar Nemzet, a government-close media outlet, that all the foreign retail chains active in Hungary have already complained because of the excess profit tax in Brussels.

SPAR is the fifth biggest employer in Hungary with 14,000 employees. It operates two logistics centres, two meat-producing plants, an additional plant, and 368 shops. Another 273 places are part of their franchise network. SPAR’s earnings before interest and taxes were EUR 120 million in 2023.

Will Spar leave Hungary?

Mr Reisch said they would not like to give up their Hungarian subsidiary “because their situation is very comfortable” here. Their wealth reaches EUR 180 million in Hungary, and they invested EUR 2 billion here. Therefore, they would fight instead.

The Hungarian government wrote a laconic answer concerning the issue to telex.hu. They said the European Union found their retail excess profit tax lawful. “Those are the facts. Every other statement is ungrounded”, the Orbán cabinet added.

UPDATE

Government rejects SPAR’s ‘false claims’ regarding measures to bring down inflation, details HERE

Read also:

• Major international food chain to take legal action against Hungarian Government – Read more HERE
• Pricing paradox: Hungarian food costs less abroad – HERE is why

Source: