Under the Hungarian VAT Act, from 1 January 2016 instead of the general VAT tax rate of 27%, a reduced tax rate of 5% is applicable to the flats to be constructed or existing in a multi-unit residential building with a total net floor space not exceeding 150 square meters. This provision of the Hungarian VAT Act will remain in force only until 31 December 2019, accordingly, after this date the purchasers will pay for these flats a VAT of 27%.

Attila Peterfalvi, the president of the Hungarian Data Protection Authority, on 19 April 2018 made some relevant comments regarding the GDPR during an interview with a Hungarian online newspaper “Jogifórum”. He highlighted that one of the main novelties of the GDPR is the principle of accountability. The data controllers must be able to demonstrate their GDPR compliance in a documented way. This does not mean, however, that the burden of proof is on them in case of a NAIH procedure.

The Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 (General Data Protection Regulation, „GDPR”) will be directly applicable as of 25 May 2018 in all organisations controlling personal data. The Hungarian National Authority for Data Protection and Freedom of Information (“NAIH” / “Hungarian Authority”) receives thousands of questions on the applicability of the GDPR. For this reason, the NAIH has published answers to some of these questions.

From 2019 the turnover threshold of tax exemption may continue to rise which would allow more micro and small business to issue VAT-exempt invoices in the framework of the low tax-bracket scheme. Tax-payer companies under the low tax-bracket will benefit most of the change, even though the regulation does not directly affect the legislation applicable on them.

As of 1 July 2018, the provisions regulating the obligations of travel agencies in the Hungarian Commerce Act will be amended in order to comply with the EU directive on package travel and linked travel arrangements.

On 12 March 2018 the Hungarian National Bank (“MNB”) published its recommendation on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee. The addressees of recommendation are fintech companies, i.e. payment initiation service providers (PISPs) and account information service providers (AISPs).

This mostly occurs in the case of high volume projects where more than one general contractor performs construction work in parallel on the construction site (“multiple contractors”). It is possible to divide the tasks in a way that the contractors perform the same works but in different locations (e.g. different contractors for different buildings), while it may also happen that the client requires different contractors for different branches or distinct tasks (e.g. deep foundation phase, low voltage, BMS).

On Thursday, April 19, 2018, CEE Legal Matters hosted a round table discussion at the Dentons office in Budapest with leading real estate experts in the market.

Fighting cartels in public procurement requires 21st century tools. The Hungarian Competition Authority (GVH) and the Public Procurement Authority of Hungary (KH) cooperate to promote fair competition in public procurement procedures. KH runs a mobile application named “Daily public procurement”, which serves as a news channel, providing daily updates for the parties interested in public procurement. The app is available both on iOS and Android free of charge from May 2017.

On the basis of the information published by the Hungarian Ministry of National Economy, the National Tax and Customs Office (in Hungarian: NAV) has introduced a paper-free, online audit system.

As of 1 January 2018, a new government decree (Decree) entered into force on the detailed regulations of the commercial activities of condominium managers, real estate managers, real estate agents, property evaluators and agents. In case of providing such activities on a commercial basis, the real estate company supervisor authority, i.e. the district and the county government offices or the notary of the municipality of the competent town must be notified. The content of the notification is also detailed by the new provisions.

A new official electronic register for general power of attorney has been established and is operating from 1 January 2018. The general POAs can be submitted in civil litigation and non-contentious cases and in administrative court procedures. The registration must be initiated at the competent regional courts. The register is not public, however it is available free of charge to the courts and other authorities, as well as to the parties concerned. The register is maintained by the National Office for the Judiciary (in Hungarian: “OBH”). 

According to a recent amendment to the Hungarian act on the general rules of electronic administration and confidential services and to its implementing decree, all state organisations providing electronic administration, including all the courts and the National Office for the Judiciary (in Hungarian: “OBH”), must ensure the electronic communication in all matters falling within their competence.

According to the new Hungarian tax procedural act entered into force on 1 January 2018, business associations are obliged to report data about their foreign bank accounts to the tax authority. The law requires that business associations having a foreign bank account number must report until 31 January 2018 such foreign bank account number and the name of the foreign bank on a special form applicable for this purpose. 

In line with a recent modification approved by the Hungarian Parliament as of 1 January 2018, employers are no longer able to prepare tax assessments for their employees. The aim of the modification was to ease the administrative burden on entrepreneurs. According to the records of the Hungarian Ministry of National Development, entrepreneurs spent an average of 34 working days per year with administrative duties, which was over the average in EU. 

As a result of the new Hungarian Code of Civil Procedure, from 1 January 2018 the parties of a dispute may conclude a settlement in civil cases before a public notary without initiating a court proceeding in the framework of a new non-litigious procedure.

The revised payment services directive (“PSD2”) has already been implemented in Hungary, most of the provisions will be effective on 13 January 2018. PSD2 will open up the payment market to new players (“fintech companies”) in the payment services, particularly to payment initiation service providers (“PISPs”) and to account information service providers (“AISPs”), and introduces strict security requirements for the initiation and processing of electronic payments (strong customer authentication – “SCA”). 

In November 2017 a new government decree entered into force on the status, organisation and tasks of the Hungarian State Treasury (Treasury).