The court upheld a lower court's decision, confirming the deduction was illegal and setting a precedent for local government financing in Hungary, the mayor said, adding that the decision was "significant" because it clarified that the "solidarity contribution" was not a tax and should have been enforced through administrative procedures, ensuring it did not endanger municipal operations.

Karacsony said the Supreme Court ruled that in 2023 that the State Treasury illegally collected the capital's current account and illegally withdrew 28 billion forints from this account. He said almost 4 billion forints in interest was also a stake.

Following the Supreme Court's decision, the capital is seeking compensation to recover the 28 billion forints too, the mayor said after consulting representatives of the capital's trade unions.

The mayor warned that the city's financial situation was dire and by the end of the year its credit limit of 37 billion forints would be reached, leaving no funds to pay salaries from January to mid-March 2026. He emphasised that the city and its companies must comply with fiscal laws, which prohibit year-end deficits.

Meanwhile, Gabor Naszalyi, head of the Unified Transport Union, said that in line with their unanimous decision representing 27,000 workers, they called on representatives of the capital and the government to resume stalled negotiations on the capital's financing, and if this did not happen within a week, the union would organise forums to inform employees that work should not be carried out unpaid.

The Hungarian State Treasury told MTI that the Kuria's ruling "did not call into question the solidarity contribution as a payment obligation or the legality of that obligation" in respect of the metropolitan administration.

In its reasoning, the court explicitly stated that the Budapest municipality was also required to contribute to the budget, the treasury said, adding that the court had not imposed any repayment obligation on the treasury.

The treasury added that it would continue to enforce the collection of the solidarity contribution in accordance with the court's latest guidance.
 

Source: MTI – Hungary’s national news agency since 1881. While MTI articles are usually factual, some may contain political bias, and readers should be aware that such content does not reflect the position of XpatLoop, which is neutral and independent.

Since the goal of XpatLoop is to keep readers well briefed, right across the spectrum of opinions, MTI items are shared to ensure readers are aware of all narratives within the local media.

XpatLoop believes in empowering readers to form their own views through complete and comprehensive coverage. To facilitate this XpatLoop has a balanced range of news partners, as you can see when you surf around XpatLoop.com

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