Hungary’s legal and business landscape is undergoing significant transformation, driven by a steady increase in M&A activity, rapid digitalization, and evolving regulatory frameworks, according to DLA Piper Hungary Partner and Head of Intellectual Property and Technology Zoltan Kozma.
“Over the past few months, we’ve seen a slight increase in M&A activity,” Kozma begins. “While we are still far from the highs of 2021, there is steady growth, particularly in the technology sector, which dominates deals. Renewable energy is another major driver of transactions, as investors continue to seek opportunities in the green transition and the financial sector remains active, with digitalization playing a crucial role in shaping M&A trends,” he adds.
“The EU’s digital agenda has introduced a massive wave of legislation, impacting many areas of work,” Kozma continues. “For example, Hungary was the first EU country to implement the NIS2 Directive, which focuses on cybersecurity, but this rapid implementation created significant challenges. Companies are still struggling to navigate the regulatory landscape, particularly because new amendments followed immediately after the law was enacted, leading to confusion among businesses.”
Furthermore, according to Kozma, another major legal development is the Digital Operational Resilience Act for the financial sector, which “aims to enhance the resilience of financial entities against cyber threats. The AI Act is also a game-changer – now that it’s in force, it places extensive obligations on businesses – not just AI developers but also AI users. This means that companies across various industries must revise contracts, implement AI compliance frameworks, and even update corporate policies to ensure AI governance is in place.”
Focusing specifically on the AI Act, Kozma says that it is having a profound impact on legal advisory services. “It requires businesses to adopt specific contractual clauses when using AI, prompting law firms to handle AI Act compliance and policies. Additionally, the EU Data Act, part of the broader Digital Decade Program, is another crucial regulation affecting IoT users, data generators, and software developers. Although already enacted, many companies are still trying to fully grasp its implications.”
Adding more to the topic of digitalization, Kozma reports that “the electronic land registry system went live in the past few months, streamlining property transactions and improving administrative efficiency. Additionally, introduced a digital citizenship program along with a new electronic signature system.” According to him, this will expedite administrative procedures for Hungarian citizens and enhance interactions with government agencies.
Shifting gears to defense, Kozma states that the sector is becoming increasingly active. “While it was relatively quiet in the past, geopolitical circumstances have led to rising M&A activity and a growing number of R&D projects in defense. We are also seeing more work in defense procurement, which is expected to expand in the coming years.” Meanwhile, in employment law, immigration policies have become stricter for third-country nationals. “Hungary has imposed new rules that make it more difficult for foreign employees to work in the country. Only university graduates receive standard work permits; others get two-year guest permits – a restriction that is causing significant complications for companies seeking to bring in foreign talent,” Kozma explains.
Finally, Kozma says Hungary continues to be a major hub for the film industry, thanks to its generous tax credit system. “A growing number of international productions are choosing Hungary, and new studios are being built to accommodate demand. This has created a stable and expanding market for specialized law firms handling film industry transactions,” he concludes.