The Hungarian Parliament enacted the tax package for 2019 in July 2018, which contains, inter alia, a significant modification in the cafeteria allowances. The aim of the reform is to simplify the proliferated cafeteria system and to reduce the associated administrative burden.

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.

The Hungarian Parliament amended the Hungarian Data Protection Act in June 2018 in order to ensure the consistency of the Hungarian legislation with the provisions of the GDPR.

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.

The Hungarian real estate and housing market is experiencing golden days. Although the market took a serious hit during the financial crisis in 2008, today enormous sums are again being invested in office buildings, shopping malls, hotels, residential areas, and retail. In order to map the underlying reasons behind the market’s boom, and to better understand how the country is dealing with the high demand for development lands and properties, CEE Legal Matters sat down with six Hungarian lawyers specialized in Real Estate & Construction and a Legal Counsel from Prologis, a Real Estate & Supply Chain Logistics company. 

On the basis of current practice of the Hungarian tax authority, Hungarian taxpayers are not always able to recover value added tax they pay even the Court of Justice of the European Union had stated the possibility of VAT reclaiming.

The first Hungarian BIM Handbook has been prepared and published on the website of Lechner Tudásközpont on 22 June 2018, free of charge. Building Information Modelling (BIM) is a new approach to design, construction and facility management, where the digital representation of the building process is used to facilitate the exchange and interoperability of information in digital format. BIM is beginning to change the way buildings look, the way they function and how they are designed and built.

The Hungarian Ministry of Justice proposed new bills on the freedom of assembly and the protection of privacy to the Hungarian Parliament on 26 June 2018.

The Hungarian Chamber of Agriculture (HCA) submitted a package of proposals to the Hungarian Parliament in June 2018 with the aim of improving the competitiveness of Hungarian agriculture.

Several amendments to the Company Registry Act entered into force on 1 July 2018. The new provisions include a new information obligation for the legal representatives, meaning that in case of the indication of personal data in addition to the statutory data content of the company register, the legal representative must draw the attention of the natural person to the fact that his/her consent to include his/her natural data in the document means that such data will be available for the public.

The so-called Integrated Legislation System (ILS; in Hungarian: Integrált Jogalkotási Rendszer) is planned to be implemented in Hungary by the end of 2018. The main purpose of the ILS is the reduction of the administrative burdens of the public administration and the increase of the quality of the services for citizens and companies by the administration.

Hungarian businesses have the “sword of Damocles” hanging over their head as the new European data protection regulation (“GDPR”) is applicable as of 25 May 2018. Due to the fact that the majority of the Hungarian companies are micro-enterprises, the administrative burdens cause an impossible obstacle to them.

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.