SBGK’s busiest practice over the last few months has been Data Protection, according to Partner Andras Gyorgy, driven by both the COVID-19 pandemic and, more importantly, by fines for GDPR breaches raising awareness among companies.
During the state of emergency in the spring Gov. Decree no. 227/2020 (“Gov. Decree”) was introduced to require the notification to the Minister of Innovation and Technology (“Minister”) and the acknowledgment by the Minister as a condition to certain foreign investments in Hungarian-based companies. Following the end of the state of emergency subchapter 85 of Act LVIII of 2020 (“Vmtv.”) prescribes the rules applicable to foreign investments which are mostly similar to the rules established by the Gov. Decree. However, in some matters the Vmtv. prescribes different rules. Now, certain provisions of the Vmtv. have been amended and supplemented by Act CIV of 2020 and the amendments have entered into force on 30 October, 2020.
As of 1 September 2020, Hungary closed its borders to non-Hungarian citizens again. The rules abolished the tricolour system of green, yellow and red countries qualifying literally all countries as red. The rules introduced then – by a recent legislative amendment – remain in force until 1 December 2020.
Handover of pubic investment – creating access roads, utilities, etc. – to the local municipality or to the state for free is required in many cases by law in Hungary. According to the current interpretation of the tax authority and courts in Hungary, such handover triggers VAT payment obligation for the real estate investor (given that VAT was previously deducted in this regard). Since – in most cases – the real estate investor is unable to charge the VAT to the municipality or the state respectively, VAT was practically its loss in such cases.
Some experts say that “data is the new oil,” but oil can catch fire easily without proper handling. When you hear concerns about the collection of personal data, you might first associate them with data protection regulations, but competition law can also seriously affect your business. Competition authorities have intervened recently against platforms by using patterns that might be widely applied to other companies. Is this just the beginning? Who is in danger?
Due to the extended economic effects of the coronavirus epidemic, the October tax package announced by the Hungarian Government was aimed to stimulate the investing climate. According to the Hungarian ‘economic protection operational body’, there are three different ways to revive the economy (i.e.: tax reduction, simplification of the administration, boosting investments).
The Hungarian Competition Authority (HCA) has initiated an investigation against TikTok, the popular social media platform. TikTok's capacity to generate vast amounts of consumer data and shower its users with ads has already sounded several alarm bells as regulators attempt to make sense of the phenomena that is digitalisation. The HCA took the initiative to scrutinise the platform with a focus on consumer protection.
At the beginning of October 2020, the prime minister has announced that the Hungarian Government continues the family protection measures and for this purpose, the VAT tax rate of new flats will be again 5% instead of the general VAT rate of 27% in case of constructions commenced until 31 December 2022.
Economic recovery in Budapest (and Hungary) is predicted to follow an elongated L-shape curve, meaning that the effects of the pandemic are to be present and felt until at least 2023. As a kind of crisis management contribution by the sectors that were less affected by the pandemic, companies operating in these sectors would be expected to be temporarily more involved in public burden-bearing to alleviate the negative economic effects of COVID-19 in Budapest.
In addition to the classic tasks of a competition authority, the Hungarian Competition Authority ("HCA") is also entitled to take action against unfair commercial practices against consumers if such practices are capable of significantly affecting competition. Following the first market study in the field of consumer protection in 2019 relating to the application of digital comparison tools (DCTs), the HCA did not hesitate to apply its findings in practice. In early 2020 it imposed a record fine on Booking.com BV for unfair commercial practices of misleadingly advertising certain hotel rooms with "free cancellation" and engaging in pressure selling. This is now followed by a decision establishing unfair practices of the biggest local market player, Szallas.hu, a main competitor of Booking.com. However, this time no fine was imposed.
Despite some political and legal debates between Hungary and the European Union, Baker McKenzie Partner Marton Horanyi, who also co-heads the firm’s Antitrust and Competition practice group in Hungary, says, “not much out of the ordinary” is going on, politically. “In fact, investors in Hungary appreciate that things have been rather stable now for the past few years.”