The Ministry of European Union Affairs has prepared a report on European Union funding for Ukraine and the economic measures required of Hungary in this context. The purpose of the report is to summarise the support already provided to Ukraine by the European Union, and to present the possible impact of the proposed financial requirements on Hungary and Hungarian citizens.
Since 2022, the EU institutions have made financial and military support for Ukraine the most important goal of the European Union, prevailing over all other priorities.
Since 22 February 2022, the EU has adopted 19 packages of sanctions against Russia. The guiding principle behind the sanctions is support for Ukraine, which is given primacy over European economic interests and competitiveness.
Between 2022 and 2025, the EU applied temporary trade measures on Ukraine, which included unprecedented preferential provisions in Ukraine's favour, and which caused significant damage to Member States bordering Ukraine. The Deep and Comprehensive Free Trade Area established between the EU and Ukraine continues to grant Ukraine unjustifiably broad access to the EU internal market, motivated by political rather than trade considerations. The agreement contains agricultural quotas that do not take into account the interests of European producers, even for the most sensitive products, and does not provide for adequate protective measures in the event of market disturbances, disregarding joint requests from the neighbouring countries.
In September 2024, the President of the Commission named Ukraine's accession to the EU as a priority for her second five-year term. The Commission's 2026 work programme states: “The EU will continue to stand firmly with Ukraine, providing steadfast support for its urgent financial and military needs and reconstruction efforts, while maintaining and expanding sanctions aimed at weakening the Russian war machine.”
The situation in Ukraine has been a constant topic at European Council meetings since February 2022, and President Volodymyr Zelenskyy has been a regular guest at these meetings. At the EUCO meetings, the 26 European heads of state and government – and then on 18 December 2025, only 25 of them – confirmed in writing that “The European Union will continue to provide, in coordination with like-minded partners and allies, comprehensive political, financial, economic, humanitarian, military and diplomatic support to Ukraine and its people.” The document calls on the Council to continue working on a new, 20th package of sanctions against Russia.
Since the beginning of the Russian-Ukrainian war, the European Parliament (EP) has kept the issue of military, financial, humanitarian and political support for Ukraine – as well as the acceleration of Ukraine's accession to the EU – high on its agenda. Since the beginning of the EP's 10th term (2024-2029), support for Ukraine has been on the agenda of plenary sessions more than 20 times.
On 29 October 2024, the Committee of the Regions adopted and issued a document entitled “Declaration of support and solidarity with Ukraine”. In this, they urge national governments to “step up political and material support to Ukraine”.
At its plenary session on 4 December 2025, the European Economic and Social Committee adopted an opinion entitled “A predictable and common European way forward for Ukrainians in the EU”, in which it notes: “The EESC remains steadfast in its solidarity with the Ukrainian people and supports them in every way possible.”
European Council position on increasing financial and military support for Ukraine
The texts adopted by most Member States of the European Council consistently advocate increased funding for Ukraine, calling on Member States to urgently increase their resources for military and financial support to Ukraine. These texts were not supported by Hungary.
In 2025, the Members of the European Council adopted five texts on financing Ukraine and potentially contributing to escalation of the war, which Hungary – either alone or jointly with other Member States – did not support.
The decision of 6 March 2025[1] states that the European Council remains committed to providing Ukraine with “enhanced political, financial, economic, humanitarian, military and diplomatic support”, as well as to “stepping up pressure on Russia, including through further sanctions". Members of the European Council state that “the European Union will continue to provide Ukraine with regular and predictable financial support” and calls on Member States “to use all options […] to increase financial support to Ukraine”. Furthermore, Members declare that they will contribute “to training and equipping the Ukrainian Armed Forces and to intensifying work to further support and develop Ukraine’s defence industry”, and are ready to contribute to the provision of “security guarantees […], including by exploring the possible use of common security and defence policy (CSDP) instruments”.
In its decision of 20 March 2025[2] Members of the European Council reiterate the points adopted three weeks earlier on increasing military and financial support for Ukraine, stepping up sanctions pressure and security guarantees. In addition, as a new passage, it “calls on Member States to urgently step up efforts to address Ukraine’s pressing military and defence needs” and expresses its commitment to “supporting Ukraine’s repair, recovery and reconstruction”.
The joint statement adopted by 26 Member States on 12 August 2025 in connection with the Alaska summit[3] also reaffirmed the European leaders' continued financial, economic and military support for Ukraine, and their intention to contribute to security guarantees.
The European Council's conclusions of 23 October 2025[4] also reiterate the previously agreed commitments regarding regular and predictable financial support. They also assert the “critical need to ensure that Ukraine remains resilient and has the budgetary and military means”; they underline that the European Council “commits to address Ukraine’s pressing financial needs for 2026-2027”, and “stresses the need for Member States to keep stepping up efforts to address Ukraine’s pressing military and defence needs”.
In the most recent conclusions, of 18 December 2025[5], 25 Members of the European Council underline the following points:
- “will continue to provide […] comprehensive political, financial, economic, humanitarian, military and diplomatic support to Ukraine”;
- “underlines the importance of Member States stepping up efforts to address Ukraine’s pressing military and defence needs”;
- “critical need to ensure that Ukraine remains resilient and has the budgetary and military means”;
- “calls for the mobilisation of all efforts to help support Ukraine in repairing, rebuilding and strengthening the resilience of its energy system”;
- “Member States are ready to contribute to robust and credible security guarantees to Ukraine”;
- “remains determined to maintain and increase pressure on Russia […] new sanctions package”;
- “reaffirms the EU’s steadfast support for Ukraine’s path towards EU membership”.
Financing for Ukraine delivered and ongoing
Since February 2022, the European Union and its Member States have disbursed €193.3 billion to Ukraine. This amount includes military, financial, humanitarian and refugee assistance. By way of comparison, between 2004 and 2024, Hungary received a net total of €73 billion in EU assistance, all sources and titles combined.
The breakdown of €193.3 billion spent on financing Ukraine to date is as follows:
|
· EU military aid: |
€63.3 billion |
|
· EU financial, economic and humanitarian aid: |
€51.6 billion |
|
· Loans and non-repayable financial assistance under the Ukraine Facility[6]: |
€36.67 billion |
|
· Support for Ukrainian refugees in the EU: |
€17 billion |
|
· Loans and non-repayable financial assistance from Member States: |
€15 billion |
|
· Interest from frozen Russian assets transferred to Ukraine: |
€3.7 billion |
In accordance with the European Council conclusions of 18-19 December 2025, the EU will provide Ukraine with an additional €90 billion in loans for the years 2026-2027. The EU will raise the necessary funds on the international financial markets in the form of loans. The transaction will be guaranteed by the MFF headroom.
Non-military support will be provided through macro-financial assistance under Article 212 TFEU. The necessary decision can be taken, on the initiative of the Commission, by the EP and the Council through the ordinary legislative procedure. A qualified majority in the Council is sufficient.
The instrument will be established within the framework of enhanced cooperation, in which Hungary, the Czech Republic and Slovakia do not participate. The intention to participate in the enhanced cooperation was expressed by 24 Member States. Based on the expression of interest, the Commission has already made the corresponding formal proposal. This will be authorised by the Council (by qualified majority) with the consent of the EP. Subsequently, decisions on macro-financial assistance will be taken only by the participating Member States. The costs of enhanced cooperation will be borne by the participating Member States. The financing of the European Public Prosecutor's Office (EPPO) sets a precedent for exemption from cost sharing: in this case, the amount due from each Member State will be deducted from their GNI-based contributions for the following year. This method could also be applied here.
Only the EU 25 EUCO text on Ukraine provides guidance on the parameters of macro-financial assistance. Accordingly, Ukraine will only have to repay the assistance if it receives compensation from Russia, and until then Russian assets will remain frozen. On the related interest expenditure, so far only the statement of Chancellor Merz is known, who spoke about an “interest-free” Ukrainian loan. This solution may be implemented in two ways, or a combination thereof:
- the interest is borne by the EU budget: this can be considered the cost of the enhanced cooperation, in which Hungary does not participate;
- the EU loan is used, in its entirety or in part, to refinance the EU leg of the G7 loan facility granted to Ukraine, which enables covering the interest charges from the proceeds of frozen Russian assets. This would not create a financial burden for the EU budget or Hungary.
Macro-financial assistance may not cover military financing. No proposal has yet been made to resolve the issue of military financing. For the EU, the European Peace Facility is the natural channel for military financing, and a significant portion of the proceeds from frozen Russian assets has been channelled into it. However, its use has been legally controversial due to the Hungarian veto.
In parallel with the legislative procedure on macro-financial assistance, the MFF Regulation needs to be amended. This requires a unanimous decision by the Council and the consent of the EP. The Commission already submitted a proposal to this effect in December 2025, which, according to their assessment, is sufficient to secure a loan of €90 billion – meaning that no new proposal is expected. A similar amendment to the MFF in 2022 limited Ukrainian financing to 2023-2024. The Commission's current proposal does not include such a time limit, but it assumes that the new MFF (2028-2034) will provide the necessary guarantees.
The “reparations loan” to be implemented through the direct use of frozen Russian assets has not been taken off the agenda. A supportive decision from the EP is expected in January 2026. It is questionable whether this will be sufficient to move forward with the process, which has stalled in the Council.
Financing for Ukraine based on the 2028–2034 financial framework
Support for Ukraine is a key element of the 2028-2034 MFF proposal package. According to the proposal, Ukraine needs significant and flexible support to address the damage caused by the war, to rebuild and modernise the country, and to support its path towards EU accession.
According to the Commission's proposal, the existing Ukraine Instrument will be merged into the Global Europe Instrument and implemented within that framework, while Ukraine will remain on the list of countries eligible for support under the European geographical pillar. This solution means that Ukraine will be able to benefit significantly from the greater flexibility rules, both within the pillar and from other pillars.
Overall, the proposed MFF Regulation does not contain any limits on time or amount related to the loans that can be granted to Ukraine. In its current form, the proposal package would allow the EU budget allocation of €100 billion earmarked for Ukraine to be increased in the future by up to several hundred billion euros through an amendment of the Global Europe Regulation under the ordinary legislative procedure, without the need for unanimity. The Commission proposes to generate budgetary room for this by reducing cohesion funds and agricultural subsidies by at least 20%.
Ukraine can also be considered a beneficiary of the next MFF in a number of other areas (e.g. support for the defence industry and military mobility). All in all, Ukraine's likely actual and total share of the next MFF could be in the range of €360 billion, according to the draft.
New financial demands put forward by Ukraine
Around Christmas 2025, President Zelenskyy unveiled the Ukrainian Prosperity Plan, which calls for $800 billion over the next decade for the reconstruction and economic development of Ukraine, in addition to military and defence spending.
The Prosperity Plan is one of the six basic documents of the Russian-Ukrainian peace process, which is scheduled to be finalised at the Davos Economic Forum (19-23 January 2026). To our knowledge, the plan consists of several blocks:
- good governance (strengthening the rule of law and fighting corruption),
- increasing productivity,
- opening up markets, integrating into the single market of the Union,
- increasing investment, establishing investment fund(s), and
- donor coordination.
It is not yet clear what the timetable for securing the necessary resources will be. In any case, it is clear that the EU's current and planned financial framework does not allow for such a large commitment under any schedule, which means that it is highly likely that a new dedicated EU loan-based instrument will have to be created. The resulting burden will therefore be delayed and phased in.
It is important to note that, as the loan facility to be granted to Ukraine for 2026-2027 will be implemented by an enhanced cooperation without Hungary's participation, based on precedent this option will be available for the implementation of the Welfare Plan as well.
However, if the Hungarian Government changes its policy and decides to participate, the contribution ratio would most likely follow the Member States' GNI ratio, which in Hungary's case represents 1.2 (1.16%) of the burden. For illustrative purposes, if we project the GNI-based share onto the calculated EU burden of $800 billion, this amounts to $9.29 billion. Projected onto the population of Hungary, this represents a burden of approximately HUF 320,717 per capita – i.e. more than HUF 1.3 million per family.
Proposals for raising the funds needed to finance Ukraine
The European Union has so far provided Ukraine with €193.3 billion in aid and €90 billion in loans as part of its unwavering financial and military support, thus placing a significant burden on the EU budget.
In addition, Ukraine is requesting a further $800 billion from the European Union, which will be supplemented by the €100 billion in funds earmarked for Ukraine in the EU's draft budget package.
The EU institutions, which are struggling with budgetary constraints, would only be able to provide further funding for Ukraine through additional resources collected from Member States. These would require significant tax increases and austerity measures from European economies.
In order to raise the necessary funds, the European Commission has set the following expectations, based on the recommendations issued since 2023 within the framework of the European Semester and infringement proceedings:
The abolition of subsidised housing loans, CSOK and tax exemptions
The European Commission regularly and openly criticises the Hungarian government's housing policy, and criticises state loan programmes that help people to buy their own homes. It also criticises the Family Housing Support Programme (CSOK), which helps families with children, and is critical of housing support for the middle-class.
In the sub-chapter on economic vulnerabilities on page 3 of the country report on Hungary[7] (the 2025 country report) prepared for the European Commission as part of the 2025 European Semester, the report condemns the fact that “as a way to boost domestic demand, Hungary makes widespread use of poorly targeted subsidised loans to households and corporations, as well as administratively controlled mortgage rates".
Page 23 of the same document explicitly criticises the preferential loan system of home creation programmes and considers rent subsidies for young people to be inadequate.
With regard to real estate, the Commission criticises low taxes and duties that facilitate home ownership (“notably no heritage and gift tax, and a very low property tax and transaction fee”), which it believes have an inflationary effect. On page 39, when criticising the state's insufficient tax revenues, it also notes that “recurrent property taxation remains relatively low” (0.3% of GDP compared to the EU average of 0.9%), and that “revenues from property taxes were relatively low” (0.8% compared to the average of 1.9%). The Commission therefore calls for higher property taxes to be levied in Hungary.
Abolition of the 13th and 14th months’ pensions, and introduction of private pension schemes
In its country reports on Hungary and related Commission documents, the European Commission openly attacks the Hungarian pension system, particularly the 13th month’s pension, urging its reduction or capping.
The country report for Hungary (the 2025 country report) prepared for the European Commission in the context of the 2025 European Semester refers to the OECD's 2024 report on the Hungarian pension system[8], which on pages 6-7 recommends adjusting the 13th month’s pension and introducing an indexed upper limit – which essentially would mean a reduction in the 13th month’s pension for a significant proportion of those eligible.
The Commission's analysis of Hungary's recovery and resilience plan classifies recent policy measures, such as the introduction of the 13th month’s pension, as a “sustainability challenge”.
Introduction of a progressive personal income tax
In its country reports on Hungary, the European Commission has been calling for the introduction of a progressive tax system for years, meaning that even those with average incomes would pay much more tax.
On page 16 of the 2024 country report[9], the Commission states that “The tax system has a low ability to correct income inequalities.”
On page 6 of the 2025 country report, the Commission also criticises the “low progressivity” of the personal income tax system.
On page 39 of the same document, the Commission is critical of the fact that “Hungary's tax revenues as a percentage of GDP are below the EU average, with [...] a relatively low reliance on labour taxes.” On page 41, it expresses a general need for progressive tax reform because “Hungary has a flat personal income tax (PIT) rate of 15%, one of the lowest in the EU.”
Criticism of tax breaks for mothers, young people and families
On page 22 of the 2025 country report, the Commission elaborates in detail its criticism of tax breaks linked to work and having children, which it believes unfairly favours higher-income, dual-earner families with several children: “Most of the social support is through tax credits, as a result of which high-income households get higher benefits than low-income groups. [...] The income tax exemption for mothers with two or more children announced in February 2025 will result in higher household income among high earners, while the income among families with the lowest levels of income will provide only limited relief for families’ living conditions.”
Proposals to increase energy prices
From the outset, the European Commission has demanded the abolition of utility price reductions, and has even launched an infringement procedure against Hungary in this regard.
According to paragraph 17 of the 2025 country report: “Hungary has one of the highest figures in the EU for fossil fuel subsidies. These subsidies, which Hungary is not planning to phase out before 2030, amount to 1.01% of GDP. Scaling down and phasing out these subsidies is in line with EU commitments and can help Hungary to control government spending.” The Commission specifically objects to the following subsidies related to fossil fuels: the utility cost reduction programme, the reduction of value added tax on natural gas-based district heating, and the refund of excise duty on diesel used in agriculture.
A total ban on Russian energy imports, which the Commission intends to introduce from 2027 onwards on the basis of the provisions of the RePowerEU Regulation[10], would also make it impossible to reduce utility costs. According to calculations, this move could increase utility costs in Hungary by up to three and a half times and would limit the country's gas and oil supply to a single source. The decision on this was already adopted by the EU's energy ministers by a qualified majority in October, and the Parliament also approved it in December. The Council's final decision is expected in early 2026 by a qualified majority, bypassing the unanimity requirement and treating it as a trade question rather than a foreign policy issue. Since banning Russian energy imports essentially qualifies as sanctions policy and therefore requires unanimity as a foreign policy decision, Hungary (together with the Czech Republic and Slovakia) has already begun preparing legal steps to bring an action against the Commission and the Council before the European Court of Justice for circumventing the veto, should this decision be taken.
The Commission also sets out general expectations for the gradual reduction of fossil fuel use, including, for example, through increases in fuel taxes. On page 41 of the 2025 country report, for example, it criticises the fact that “the nominal marginal tax rates on diesel and unleaded petrol remain below the EU average”.
Taxation of government bond yields
In its 2025 country report on Hungary, the European Commission criticises the system of tax-free, long-term government bonds, and urges Hungary to tax government bonds.
On page 55 of the 2025 country report, it states that “Retail participation has been improving when looking at the level of direct and indirect household investments.”, but, “The issuance of tax-free government bonds […] does not create the appropriate incentives to foster the development of capital markets.”
On page 60 of the country report, the following comment is made: “Overall, it is difficult to incentivise retail clients towards insurance products (which also have a large majority of government bonds) or investment funds, if direct access to government bonds is tax free.”
Hospital closures and bed reductions
On page 23 of the 2025 country report, the European Commission criticises the Hungarian government for spending too much on hospitals, and therefore recommends reducing the number of hospital beds for reasons of cost-effectiveness.
This is explained in more detail on page 109: “this, together with a high number of hospital beds (590 per 100 000 population in 2022, much higher than the EU average), illustrates Hungary’s strongly hospital-centred care model. Over-reliance on hospitals within a health system can hamper healthcare accessibility, suggesting opportunities for optimising the cost-effective allocation of resources.”
Abolition of workers' loans
On page 94 of the 2025 country report, the Commission criticises the introduction of workers’ loans (Munkáshitel), which would provide financial incentives to help young people find work quickly.
Criticism of support for domestic SMEs
The Commission criticises the state aid provided by the government to small and medium-sized enterprises, as well as the lower retail taxes for domestic companies and the sectoral surtaxes on large foreign companies, which it considers discriminatory, as they do not affect domestic companies.
According to page 13 of the 2025 country report, it objects to “the significant involvement of the State in business financing” and that “the overall state subsidies, including grants, to firms are also the highest in the EU, amounting to an average of 2.6% of GDP per year between 2017 and 2022 (EU average: 1.4%).”
On page 23 of the 2025 Rule of Law Report, the Commission makes the criticises the fact that “tailor-made special taxes (such as the bank tax) and restrictions on the expansion strategies of foreign companies [...] cumulatively and significantly damage the financial base for certain foreign investors.”
The Commission's June 2025 infringement procedure package[11] expresses similar criticism, objecting to the more favourable retail taxes applied to domestic companies compared to foreign ones. “Due to the current design of the retail tax regime, foreign controlled retail companies operating in Hungary […] are subject to high and steeply progressive tax rates on their turnover. Domestic retailers operating on the Hungarian market under their respective brands and logos via franchise systems are not subject to the same highest rates […]”
[1] European Council decision adopted by 26 Member States on 6 March 2025, EUCO 10/25 – CO EUR 8 (https://www.consilium.europa.eu/media/0mpg5ctf/20250306-ukraine-euco10-25-en.pdf)
[2] European Council decision adopted on 20 March 2025 by 26 Member States, EUCO 11/25 – CO EUR 9 (https://data.consilium.europa.eu/doc/document/ST-11-2025-INIT/en/pdf)
[3] Joint statement by the leaders of the European Union, adopted by 26 Member States on 12 August 2025, on Ukraine (https://www.consilium.europa.eu/en/press/press-releases/2025/08/12/statement-by-european-union-leaders-on-ukraine/)
[4] European Council decision adopted by 26 Member States on 23 October 2025, EUCO 19/25 – CO EUR 16 (https://www.consilium.europa.eu/media/zs3a30wp/20251023-text-ukraine-en.pdf)
[5] European Council decision adopted by 25 Member States on 18 December 2025, EUCO 26/25 – CO EUR 21 (https://www.consilium.europa.eu/media/qxolrs5r/en-20251218-text-ukraine.pdf)
[6] The total planned amount of disbursements under the Ukraine Facility until 2027 is €50 billion. Thus, with the remaining €13.33 billion under the Ukraine Facility, the total amount of financing disbursed and approved to date exceeds €206.6 billion.
[7] Document SWD (2025) 217 final, adopted in Brussels on 4 June 2025, COMMISSION STAFF WORKING DOCUMENT 2025 Country Report – Hungary, which accompanies the country-specific recommendation for our country(https://economy-finance.ec.europa.eu/publications/2025-european-semester-country-reports_en)
[8] OECD (2024): “Strengthening the Hungarian Pension System” (https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/structural-reforms/country-policy-support/ Strengthening-the-Hungarian-Pension-System.pdf)
[9] Document SWD(2024) 617 final, adopted in Brussels on 19 June 2024, ‘COMMISSION STAFF WORKING DOCUMENT – 2024 Country Report – Hungary’ (https://economy-finance.ec.europa.eu/publications/2024-european-semester-country-reports_en)
[10] Document COM (2025) 828 final / 2025/0180(COD), adopted in Strasbourg on 17 June 2025,
“Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on phasing out imports of Russian natural gas, on monitoring energy dependencies more effectively and on amending Regulation (EU) 2017/1938” (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52025PC0828&qid=1750669110360)
[11] https://ec.europa.eu/commission/presscorner/detail/en/inf_25_1241 , presented in Brussels on 18 June 2025