Representatives of certain sectors can reduce some of their tax burdens in the future if free movement of business headquarters becomes possible in Hungary – and they can thank a Baja-based company, writes Napi.hu.
According to a recent decision by the European Court of Justice Advocate General Poiares Maduro, Hungary will likely have to allow companies to move their headquarters to another member state without liquidating the business first. The court said the regulation which allows companies to move their headquarters within the country but not outside of its borders violates their right to free settlement.
It is expected that the opportunity to move headquarters freely will not direct masses of companies to Slovakia, but it would rather be an addition to usual basic rights, such as the free movement of people. Large companies are not likely to move, as they start subsidiaries instead. The opportunity did not cause considerable movement elsewhere in Europe either.
In 2005, Baja-based Cartesio Bt, a company which offers translation and education services, wanted to move its headquarters to Italy due to more favorable taxation, but it did not want to change its nationality. The company court refused to register the address of the Italian headquarters, and the case went from the Szeged Court to Luxembourg.
During the proceedings, however, the company could not operate, as it is not possible to liquidate and newly found a company in one day, and it also had considerable expenses as a result of the case. In addition, as a new company, it would not have rights to a number of benefits.
If the court’s decision corresponds with that of the advocate general – as it usually happens – Hungary will have to prepare for unavoidable changes.