Abolishing taxes saved a dying Hungarian village

A world away from Panama, the sleepy eastern Hungarian village of Komlóska has become a kind of tax haven – to survive.

The village of 300 inhabitants is in one of Hungary's poorest regions with high unemployment and a shrinking population.

But in 1990 the mayor, László Köteles, decided to reverse its decline by abolishing all local taxes, on companies, property, everything - although people still pay national taxes.

He told Euronews: "Since there were no local companies here, we decided to just eliminate those taxes that the local council collects to help people to set up businesses, their own companies."

But it was only after the economic crisis of 2008 that the village started to really promote itself Europe wide and companies flooded in.

There are now 117 based there, a majority of them are international transportation and logistics firms which run 3,300 lorries around Europe.

The boss of one of them said: "Of all the taxes, business tax is one of the heaviest burdens on an international logistics company because that's 2% of our income here in Hungary."

"We have an income of around €1 million a year so we can invest that 2% to develop the company."

The village gets back 40% of the tax the companies registered there pay to Hungary's state government.

The money is invested in local farming and facilities like a kindergarten for the local children.

The mayor said: "I think the state is the big winner from our tax haven because most of the revenue that is raised goes to the state. The companies that are based here have created more than 3,000 jobs and our trucks are on the road with Hungarian license plates, they pay all their fees and their insurance in Hungary."

A local correspondent explained that the village is so remote it doesn't even get a mobile phone signal, but that's not holding back its growth.