CMS, Freshfields Bruckhaus Derringer, and Kirkland & Ellis have advised Advent International on the acquisition of Zentiva, Sanofi’s European generics business, for EUR 1.9 billion. Weil Gotshal & Manges and Tuca Zbarcea & Asociatii advised Sanofi on the sale.
In recent years, the Hungarian Competition Authority (HCA) has seemingly aimed to foster cooperation between itself and market participants. Recent case law shows that the HCA strives for cooperation even when market participants allegedly commit grave infringements of the competition rules. Market participants are advised to harness this tendency and the HCA's willingness to reach decisions more efficiently. This article examines a number of recent cases and the lessons learned.
According to an amendment to the Hungarian Corporate Income Tax Act approved in July 2018, taxpayers may be eligible for higher tax allowance in connection with an investment project to comply with energy efficiency targets, upon placing the project into operation, in the tax year following the year when the project was placed into operation - or in the same tax year at the taxpayer’s discretion - and in the following five tax years.
As Mr. István Nagy, Minister of Agriculture explained in September 2018, „the undivided joint ownership paralyses the Hungarian economy, and from a competitiveness point of view it is essential to be deleted”. The Hungarian agricultural land and forestry ownership conditions are not optimal, since the average plots are too small and they have many owners. This situation affects 3.5 million citizens and 1 million hectares.
The establishment and renovation of shopping centers will be governed by stricter rules according to a new regulation approved in the summer 2018. The so-called “Plázastop” (in English: Law on stopping malls) was introduced in 2012 for the purpose of preventing the spread of shopping malls. The regulation was originally planned to be in force until the end of 2014, however, it had been amended only in 2015 when the extension and establishment of shopping malls exceeding the floor area of 400 sqm was prohibited.
The Hungarian Minister of Finance announced on 7 August 2018 that the maximum number of third-country nationals who might be employed in Hungary with work permit shall be 55,000. Last year the limitation was 59,000, which means that the maximum number of third-country nationals has been reduced with 4,000. The decision may be surprising, since according to the statistics severe labour shortage is experienced in key sectors and there is a need for the employment of third-country nationals.
The legal practice analyser group of the Curia (i.e. the Hungarian supreme court) published a summarizing opinion on the judicial practice of the possession protection cases initiated before Hungarian notaries. Under the provisions of the Civil Code, the owner shall refrain from any conduct that would unnecessarily disturb others, especially his neighbours, or that would jeopardize the exercise of their rights. The possessor is entitled to request the termination of the disturbance from the notary public within one year.
The discounted 5% VAT rate introduced in 2016 will be abolished as of 1 January 2020, meaning that the 27% VAT rate will be applicable from that date, which can have significant effect on the market. In order to avoid a possible market chaos, the Hungarian Real Estate Development Roundtable Association (IFK) proposed introducing flexible, gradual VAT and stamp duty regulations that may result in increasing tax burden in the next 3-4 years. The new system could ensure that the supply and the sales of the new real estates are not reduced drastically from 2020.
17th October, 2018, Courtyard of Brody Studios, Vörösmarty utca 38, Budapest 1064
The European Commission („EC”) has launched an infringement proceeding against Hungary in July 2018. According to the EC, the Hungarian law excludes certain cost types from the electricity and internal gas network charges, which are in infringement of the prescribed cost recovery plan set out in the Directive of Electricity and Internal Gas. In addition, the EC also stated that Hungary had accepted certain amendments in its electricity legislature that restricts the right of market operators to ask for a complete judicial review on the decision of network charges of the national regulatory body.