International Food Chain Pulls Out of Hungary Due to Political Pressure
The CEO of SPAR Austria, Hans Reisch, recently made shocking allegations against Hungarian Prime Minister Orbán, claiming that the PM wanted one of his relatives to invest in the company. According to Mr. Reisch, this move was part of the Hungarian government’s plan to take ownership of SPAR Hungary, the second-biggest food chain in the Hungarian market.
In response to these alleged pressures, SPAR has taken extraordinary measures to protect its assets. They have moved some of their capital from Hungary to Switzerland and reorganized the management rights of their subsidiaries in North Italy, Slovenia, Croatia, and Hungary. Additionally, they have split their Hungarian operations into two parts to mitigate potential losses strategically.
The decision to safeguard their Hungarian subsidiary comes after facing challenges from the Hungarian government, including increased taxes and price caps on retail companies. As a result, SPAR has seen a significant decline in income in their Hungarian branches, prompting them to take legal action against the Hungarian government at the European Commission.
Despite the challenges, SPAR remains committed to its presence in Hungary, where they are the fifth largest employer with 14,000 employees. The company operates numerous logistics centers, meat-processing plants, and a network of over 368 stores, including franchised locations. While they have invested heavily in Hungary, with revenues of EUR 120 million in 2023, SPAR is determined to stand their ground against government pressures.
In response to SPAR’s complaints and legal actions, the Hungarian government has maintained that their retail excess profit tax is lawful according to the European Union. Despite this, SPAR and other foreign retail chains in Hungary continue to voice concerns over the tax policy and its impact on their operations.
The situation with SPAR and the Hungarian government remains tense, with both parties standing their ground. As the company navigates these challenges, their dedication to their Hungarian subsidiary and employees remains steadfast, signaling a potential long-term battle ahead.
