The Hungarian Parliament is discussing a proposal on the amendment of the Act on Electronic Communications in order to implement the regulations of EU Directive 2018/1972. This latter Directive was adopted by the European Union in December 2018 to set up the European Electronic Communications Code. Member Sates shall implement its regulations until 21 December 2020 after a 2-year long preparation period.

Due to the practical difficulties created by the lockdown measures taken against the coronavirus pandemic, the European Council has agreed that the VAT e-commerce package should apply from July 1, 2021, rather than January 1, 2021.

In order to execute the Hungarian Economy Protection Action Plan, some provisions of the Hungarian Bankruptcy Act and the Company Registry Act must be applied differently based on a government decree adopted in the end of May 2020 (Government Decree). As a result, during the state of emergency, a creditor may submit an application for the opening of a liquidation proceeding only if the deadline determined by the creditor in the payment notification and the subsequent 75 days expired without any result. In addition, the amount of the claim must exceed HUF 400,000.

The Hungarian National Authority for Data Protection and Freedom of Information (the "Authority" or "NAIH") recently imposed a fine of HUF 100m (approx. EUR 285,000) on one of the biggest electronic communication service providers Digi Távközlési Szolgáltató Kft. ("Digi"). This is the highest data protection fine imposed in Hungary since the entry into force of the GDPR and the highest ever fine levied in Hungary for a violation of data protection regulations.

“The most important thing right now is that the state of emergency was terminated,“ says Peter Berethalmi, Partner at Nagy es Trocsanyi in Budapest.

The Hungarian Parliament accepted a bill on 16 June 2020, which would enable the creation of special industrial zones. “The designated special industrial zones will be contributing to the restarting of the economy, creation of new jobs, and also the preservation of the existing jobs” stands in the press release. According to the legislation, the main goal of the regulation is to facilitate a fairer distribution of tax income realized from greater investments as these zones would be no longer under the control of the local council.

Andras Fenyohazi has been promoted to Partner at Cerha Hempel in Budapest, where he will head the newly formed Construction Group. 

Lakatos Koves & Partners has advised the Dubai-based Al Habtoor Group on the sale of Budapest's Rumbach Center to GalCap Europe, a real estate asset and investment manager operating in Austria and Central Europe. Cerha Hempel advised GalCap Europe on the deal.

The Hungarian government introduced a state of emergency in March and took several extraordinary measures to mitigate the economic consequences of the coronavirus crisis. These measures heavily affected the Hungarian economy and legal system. Since the Hungarian government revoked the state of emergency, it is time to summarize the relevant legal background.

The Hungarian Government promulgated a decree (229/2020) entered into force on 1 June 2020, amending the decrees on certain procedural measures in force during an emergency (74/2020.) and on certain penitentiary rules in connection with the declaration of a state of emergency (90/2020.). The amendment regulates civil court proceedings for a transitional period, since on 26 May 2020 two bills related to the termination of the state of emergency were submitted to the Parliament, which define rules of court proceedings for a longer period in the future. As a result, the rules of this decree will only be used until the two bills mentioned above are accepted by the Parliament.

On 28 May 2020, the Hungarian Government adopted amendments to the laws on company liquidation and forced deletion procedures to cushion the impact of the global coronavirus pandemic on the economy.

The Hungarian Government issued a new decree on 25 May 2020 (“Decree”), in which restrictions on certain transactions involving foreign investors are introduced.

In Hungary, the defense against the epidemic has entered into a phase in which measures set out by the government for reducing or preventing the spread of the epidemic are gradually relaxed. The curfew has been lifted, all stores may open and may be visited by customers under certain conditions. However, the rules for maintaining social distance - keeping a distance of 1.5 meters from one another, wearing mask, scarf or shawl when shopping or traveling by public transport - still apply.

The Government of Hungary has proposed an amendment to Act XLIX of 1991 on bankruptcy and liquidation proceedings (Insolvency Act) aiming to modernise the procedural rules of insolvency proceedings, for example by introducing communication via email and video conferences.

While there were still as many as 60 types of tax in Hungary five years ago, this number was reduced to 54 by the end of last year. This process was interrupted by the recent introduction of crisis taxes. It remains to be seen whether this trend will now be reversed.

The coronavirus pandemic has been affecting both domestic and international trade and commerce around the world. States have reacted with robust mitigation measures, including closing borders, implementing a range of travel bans and engaging a myriad of internal domestic health and wellbeing procedures. These measures are causing unprecedented disruption to the trade, transport, labor market, production and supply chains.

On 25 May 2020, the Government of Hungary adopted a new decree on the screening of foreign investments in Hungary (the "Decree"). The new screening regime aims to protect public security, order and health during the COVID-19 pandemic, and introduced a new approval requirement for investments into certain Hungarian companies. The screening will be carried out by the Minister of National Economy (the "Minister"). The Decree entered into force on 26 May 2020 while leaving the earlier FDI screening mechanism unaffected (see our earlier FDI screening article). As a result, two parallel FDI screening mechanisms now apply in Hungary.

Erdos | Katona has opened its doors as a transactional boutique in Budapest.