CEE Legal Matters

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  • The EU Strategy for Cooperation in the Indo-Pacific Revisited: A Transformative Opportunity for Bulgarian Business Companies

    The European Union’s Strategy for Cooperation in the Indo-Pacific, launched in October 2021, marked a significant shift in the EU’s foreign policy. It represented a comprehensive approach to engaging with the region of the Indo-Pacific, which is increasingly recognized as a global economic and strategic hub. Together, the Indo-Pacific and Europe hold over 70% of global trade in goods and services, as well as 60% of foreign direct investment (FDI) flows.

    Assessment of Present-Day Position

    Almost four years later the EU Strategy for Cooperation in the Indo-Pacific’s focus on sustainable development, economic and digital connectivity, and security continues to open a wealth of opportunities for businesses in Europe. The document proved that it is not outdated. It continues to evolve to meet emerging challenges and opportunities in both regions, including the inauguration of the new U.S. administration. While the strategy, introduced in October 2021, provides a broad framework, its implementation throughout the years has been dynamic, with ongoing updates to address new geopolitical and economic developments. Currently, the spirit and different aspects of this strategy are also applicable on bilateral basis.

    After the Russian invasion of Ukraine in February 2022, the EU has faced the challenge of continuing its realistic commitments to the Indo-Pacific region despite the difficulties created by efforts to allocate resources and capacities under the new circumstances. Security issues started to play a more significant role, but there is even greater potential for renewing the agenda in areas such as economy, trade, investment, and sustainable development, as well as implementing infrastructure projects in the Indo-Pacific. In 2024 an increase in the focus on security and defense could be noted (Japan). At the same time, the preferences on the side of some countries from Southeast Asia go to deepening the relations with the EU member states mostly in the economic field in an attempt to prevent EU’s excessive engagement with security issues.

    In December 2022 EU pledged to mobilize 10 billion EUR for green transition and sustainable connectivity projects in ASEAN (Association for Southeast Asian Nations) member states under Global Gateway Initiative. Six months later, Dr.Frederick Kliem, a research fellow at Nanyang Technological University in Singapore most effectively drew attention to his forecast that “the war in Ukraine will inevitably put the brakes on European funding capacities elsewhere. It would be highly unrealistic to expect that the financing of the EU Indo-Pacific Agenda could be fully implemented. Nonetheless, the imperative for the EU to engage in the Indo-Pacific, especially in economic and sustainable development matters, has not faded”. The reality proved such a prediction. The EU Strategy for Cooperation in the Indo-Pacific became more specific and focused on measurable outcomes that would enhance accountability.

    This article is focused mainly on the new opportunities for trade & investment for Bulgarian companies in some countries from the region of Indo-Pacific, mainly in East Asia.

    The EU aims to maintain a free and open Indo-Pacific, in line with the principles of democracy, rule of law, human rights and international law. The EU’s approach is designed to foster a rules-based international order, a level playing field, as well as an open and fair environment for trade and investment, tackling climate change and supporting connectivity with the EU. The Indo-Pacific Strategy thus commits the EU to further support the ASEAN (Association of South East Asian Nations)-led regional architecture and ASEAN’s centrality within it.

    The EU Strategy for Cooperation in the Indo-Pacific focuses on seven priority areas:

    Sustainable and Inclusive Prosperity: Promoting economic growth and development that benefits all segments of the society through building more resilient and sustainable supply and value chains by diversifying trade and economic relations. EU has an intention to pursue the extension of its network of FTAs (free trade agreements) with Indo-Pacific partners through the ongoing negotiations with Australia, Indonesia, India and Thailand and possible relaunch of negotiations with other ASEAN partners such as Malaysia and the Philippines. Bilateral trade agreements still remain a priority in the relations between EU and ASEAN, provided that the conditions to ensure a shared level of ambition like the cases with Singapore and Vietnam FTAs are met, especially in the field of public procurement and sustainable development. An EU-ASEAN FTA is still a matter of a very distant future.

    EU-ASEAN Dialogue on Sustainable Development and EU-ASEAN Dialogue on Trade and Business are going to play even more important role in the next several years. Regarding Southeast Asia, the biggest challenge here is related to some very visible signs of rising protectionism and economic nationalism on commodities and strategic industries (for example ban on the nickel ore exports from Indonesia in order to boost downstream industrialization of the country). It is largely expected the new administration of Indonesia to focus more on critical minerals sector. At the same time, Indonesia and Malaysia have welcomed last autumn the European Commission’s proposal to delay the implementation of its deforestation regulation. It was seen as a gesture on the side of the EU to the important palm oil sector in both countries. Such a directive was aimed at production of unsustainable biofuels based on palm oil.

    Green Transition: Addressing climate change and promoting environmental sustainability are among the key tasks for advancing green transition through conclusion of green alliances & partnerships such as the ASEAN/Southeast Asia Team Europe Green Initiative, Just Energy Transition Partnerships for Indonesia and Vietnam and EU-ASEAN Dialogue on Circular Economy.

    Ocean Governance: Ensuring the sustainable use and management of ocean resources, including an increase of the EU support for Indo-Pacific countries fisheries’ management and control systems.

    Digital Governance and Partnerships: The EU has successfully set up Digital Partnerships with Japan, Republic of Korea and Singapore as well as Trade & Technology Council with India. EU-ASEAN Dialogue on Digital Economy and Society, included under the EU-ASEAN Team Europe Initiative on Sustainable Connectivity could be underlined. EU has concluded Digital Trade Agreement with Singapore and EU-Japan Agreement on Cross-Border Data Flows. For example, through the EU-Singapore Digital Partnership, both sides explore common approaches to semiconductors, in e-identification and in AI governance as well as working on projects such as interoperable e-invoicing standards to facilitate digital trade and small and medium enterprises digital transformation.

    Connectivity: The main focus here is on improving transport, energy, and digital links between the EU and the Indo-Pacific. EU Global Gateway aims to reduce the Indo-Pacific’s infrastructure gaps by providing capital for investment into hard and soft infrastructure, with the support of development banks and the private sector. In this regard, the EU-ASEAN Sustainable Connectivity Team Europe Initiative plays a very significant role.

    Security and Defense: This key area is related mainly to strengthening regional security through partnerships and joint operations and deepening the EU’s role in the ASEAN Regional Forum. Main activities of cooperation are focused on maritime security, cybersecurity, counter-terrorism and crisis management. It should be noted that free and secure maritime supply routes are a vital strategic interest of the EU. Freedom of navigation in the Indo-Pacific is the most important issue from business companies’ viewpoint.

    Human Security: Providing humanitarian aid and addressing human-induced disasters and natural hazards, with particular attention to the most vulnerable.

    From the viewpoint of the Bulgarian economy and Bulgarian business companies four of these seven areas are very important: sustainable and inclusive prosperity, including trade issues; digital governance and partnerships, including research and innovation; connectivity and security (especially cybersecurity).

    For Bulgarian business companies, the EU Strategy for Cooperation in the Indo-Pacific offers a gateway to new opportunities for trade & investment, enabling them to access some of the world’s fastest-growing economies and build new partnerships. Deepening the EU economic ties with the Indo-Pacific could lead to new markets for Bulgarian products and services. Such an expansion could lead to diversification of the Bulgarian export markets and reduction of dependency on the Bulgarian traditional trading partners. It would also result in the resilience of the supply chains for both Bulgaria and their reliable Indo-Pacific partners. However, the most important challenge is related to attracting the attention of companies from East Asia to invest in Bulgaria. In this regard, special efforts are needed.

    The EU’s focus on green and digital cooperation opens avenues for Bulgarian companies specializing in renewable energy and IT services. Connectivity initiatives under the EU Strategy for Cooperation in the Indo-Pacific create opportunities for Bulgarian construction, engineering and logistics companies to participate in large-scale infrastructure projects. Such projects are not limited to physical infrastructure, but also include opportunities for Bulgarian software companies to build digital infrastructure and digital networks.

    Examples: There are two emerging main areas for cooperation between Bulgaria and Singapore: resilience of the supply chains and IT, digital economy and cybersecurity. Bulgaria could contribute to the efforts of the Government of Singapore, business associations and trading companies for achieving a supply chains’ resilience through increase of the exports of Bulgarian high-quality food products to the Singaporean market and other markets in East Asia. Bulgarian companies are also interested in export of food and cosmetic products certified by halal standards to Indonesia, Malaysia and Brunei. As a regional ICT hub and № 1 business process outsourcing in Southeastern Europe, Bulgarian IT, software and start-up companies are interested in collaborating with companies from Singapore, including on EU-funded projects based on the widely recognized talent of the Bulgarian software engineers. Other key sectors for economic cooperation and business partnerships between Bulgaria and some countries in Southeast Asia are: semiconductors (Singapore and Malaysia); clean energy (development and commercialization of green hydrogen with Malaysia and geothermal energy with Indonesia); robotics and automation (Singapore), creative economy (Indonesia).

    In the light of many opportunities for serious consideration, in their dealings with companies from Southeast Asia, the Bulgarian companies must navigate certain challenges. Among them understanding local regulations and cultural differences is essential for successful market entry. The high diversity of the region of Southeast Asia means that each country operates within a unique legal framework. Successful collaborations rely on building relationships first and meeting with people face-to-face, either virtually or in person. Identifying the right local partner could be a key for Bulgarian firms to facilitating business operations and expanding to multiple markets within the region of Southeast Asia. The Indo-Pacific is a highly competitive region, requiring companies to innovate and adapt to stand out.

    Regarding the geopolitical risks, it should be noted that the regional tensions in East Asia, particularly in areas like South China Sea and Taiwan may pose risks to operations and investment. Expanding business operations from Bulgaria to East Asia involves careful planning and strategic execution involving the following steps: preparation of market entry report; understanding the legal frameworks in the countries from the region; adapting business strategies of the Bulgarian firms to the specific country; leverage the digital economy and online presence; building relationships; identifying the right local partner; exploring government incentives in different countries from East Asia; budget and funding; risk assessment; making choice of the right entry mode; participation in trade shows, business missions, conferences and networking events as well as connections with local industry associations and chambers of commerce.

    Conclusion

    The EU’s Indo-Pacific Strategy represents more than just a geopolitical shift. It is an economic blueprint with tangible benefits for businesses across Europe, including Bulgaria.

    The EU’s Strategy for Cooperation in the Indo-Pacific could play a role of transformative opportunity for Bulgarian business companies. Still this opportunity seems to be largely unnoticed or neglected.  By aligning their marketing and investment plans with the strategy’s focus areas—trade, sustainability, digitalization, and security— Bulgarian firms can expand their reach into one of the world’s most dynamic regions. While challenges such as regulatory complexity and competition remain, proactive strategies and regional collaborations can enable Bulgarian companies to position themselves as key players in the evolving global business landscape.

    By Petar Andonov, Business Development Director, Boyanov & Co

  • DPO and Representative – Personal Data Protection

    Although more than six years have passed since the adoption of the new Personal Data Protection Law (the “Law“), there are still practical uncertainties about when data controllers and processors must appoint a Data Protection Officer (DPO). Additionally, many foreign data controllers and processors subject to the Law have yet to fulfill their obligation to appoint a representative for personal data protection. This lack of compliance makes it harder for individuals to exercise their rights when it comes to the processing of their personal data.

    Based on our extensive experience in this field, we’ve summarized the key aspects of these two issues below.

    • DPO

    According to the Law, similarly to the GDPR (General Data Protection Regulation), data controllers and processors are required to appoint a DPO in specific situations. These include:

    • regular and systematic monitoring – when their core activities involve processing operations that, by their nature, require regular and systematic monitoring of a large number of individuals (e.g., surveillance services provided by video monitoring agencies);
    • large-scale processing of sensitive date – when special categories of personal data (such as data on religion, ethnicity, race, political opinions, genetic or biometric data) are processed on a large scale;
    • processing by public authorities – when processing is carried out by public authorities (e.g., government bodies, local governments or public institutions).

    To enhance personal data protection and mitigate the risks of unlawful data processing, data controllers and processors can voluntarily appoint a DPO. This can be an internal employee or, in cases where no internal candidate has sufficient knowledge of data protection regulations, an external expert. In such instances, external DPOs are often law firms with experience and expertise in personal data protection.

    If a DPO is appointed, controllers and processors must inform the Commissioner for Information of Public Importance and Personal Data Protection about the appointment.

    • Representative of Foreign Controller and Processor

     The Law applies not only to data controllers and processors based in Serbia but also to foreign entities that offer goods or services to individuals in Serbia or monitor the activities of individuals within Serbia. In such cases, foreign controllers and processors may be required to appoint a representative in Serbia to facilitate communication with Serbian individuals and ensure better protection of their data.

    While some companies have appointed representatives in Serbia (typically law firms), many foreign controllers and processors have not fulfilled this obligation. Given the scale of their business operations in Serbia, many of them are likely obliged to do it. Failure to appoint a representative, despite being legally obligated, exposes these entities to potential sanctions. These may include bans on data processing or the export of data outside Serbia—measures that could significantly affect their operations in the country.

    By addressing these requirements, both local and foreign entities can ensure compliance with the Law, minimize risks, and build trust with individuals whose data they process.

    This text is written for informational purposes only and does not constitute legal advice. We are at your disposal for any additional information.

    By Milorad Glavan, Partner, DNVG Attorneys

  • Intellectual Property Rights in Software

    Intellectual property is a broad concept that covers several types of legally recognized rights originating from some type of intellectual creativity or that are otherwise related to ideas. Intellectual property rights are rights to intangible things, i.e., ideas as expressed (i.e. copyrights) or as embodied in a practical implementation (i.e. patents). Fundamentally, intellectual property rights are rights in ideal objects, distinguished from the material substance in which they are instantiated. In today’s legal systems, the key forms of intellectual property are (i) copyrights, (ii) trademarks and (iii) patents.

    Copyright is a right given to authors of “original works,” such as books, articles, movies, and computer programs. Copyright gives the exclusive right to reproduce the work, prepare derivative works, or perform or present the work publicly. However, copyrights protect only the form or expression of ideas, not the underlying ideas themselves. While registering a copyright with a competent registration authority to obtain specific legal advantages is possible, such registration is not a prerequisite for a copyright to exist. A copyright comes into existence immediately upon the production of the work in a “tangible medium of expression” and lasts for the life of the author plus an additional period (depending on country-specific intellectual property regulations) in which the employer exclusively owns the copyright.

    A trademark is a word, phrase, symbol, or design used to identify the “producer”, i.e., the source of goods or services sold, and to distinguish them from the goods or services of others, i.e. market competitors. For example, Apple Inc.’s “bitten apple” mark on their products identifies them as that company’s products, distinguishing them from competitors such as, e.g., Samsung. Trademark law primarily prevents competitors from infringing upon the trademark, i.e., using confusingly similar marks to identify their own goods and services. Unlike copyrights and patents, trademark rights can last indefinitely if the trademark owner continues to use the mark and renews its registration with the competent registration authorities under applicable statutory regulations.

    A patent is a property right in inventions, i.e., in devices or processes that perform a “useful” function. A patent effectively grants the inventor a limited monopoly on the production, use, or sale of the invention. However, a patent only grants the patentee the right to prevent others from practising the patented invention – it does not grant the patentee the right to use it. Moreover, not every innovation or discovery is patentable; for example, in the US, three categories of subject matter are non-patentable, i.e. laws of nature, natural phenomena, and abstract ideas.

    The legal protection of intellectual property rights on computer programs, i.e. software, has been the subject of much debate. Since computer software is one of the main pillars of the information society, this is truly an issue of global concern. Arguably, the process of writing computer software, i.e. coding, is highly creative, and the software industry is one of the most valuable in today’s knowledge-based economies. Hence, software is expected to enjoy protection under intellectual property laws worldwide. However, the subject that raises a lot of controversy is – what type of protection computer software should enjoy. For intellectual property to be legally protected as a copyright or a patent, it must meet specific requirements, i.e., in, the context of patent protection – it must be an invention which performs a “useful” function. To examine the patentability of computer software, one must examine what it is. Fundamentally, computer software is a collection of coded instructions written in a language that a computer can read (programming language). However, to enable the running of a certain software application, it has to be installed on adequate hardware (PC, laptop, smartphone, set-top box, etc.) equipped with an adequate operating system (a special software application that creates an environment for the installation and running of different software, e.g. Mac OS/X or iOS, Microsoft Windows, Ubuntu, etc.). Therefore, the production of computer software goes beyond coding since, depending on its specific use, it must be functionally integrated within a specific hardware and operating system environment.

    Currently, the legal protection of computer software varies significantly across jurisdictions, reflecting divergent approaches to intellectual property rights. In the United States, courts have recognized that software can qualify for patent protection through the “article of manufacture” doctrine. This approach considers software stored on a computer-readable medium, such as a USB or CD/DVD, as a patentable invention if it contains instructions that enable a computer to perform a specific process. In contrast, the European Union applies a stricter standard to software patentability. Under EU law, software cannot be patented unless it demonstrates a “further technical effect” beyond the normal interactions between hardware and software. This means that a computer-implemented invention must satisfy the general patentability criteria applicable to other fields: it must (i) exhibit technical character and address a technical problem, (ii) be novel, and (iii) involve an inventive technical contribution to the existing body of knowledge (prior art). Consequently, software that fails to meet these requirements cannot be patented in Europe. The same is true for North Macedonia since its laws are harmonized with EU standards.

    While some countries have adopted the broader U.S. approach, allowing more expansive patent protection for software, many jurisdictions continue to restrict software protection to copyright. In such systems, software is classified as a “literary work,” granting automatic copyright protection without the possibility of obtaining a patent. Thus, the current global landscape for software protection relies on a mix of copyright and patent mechanisms, with the applicable framework varying significantly depending on the jurisdiction.

    Copyright protection for software is automatic upon its creation and fixation in a tangible medium, classifying it as a “literary work” under copyright law. This protection safeguards against unauthorized copying, requiring others to obtain the author’s consent, typically in exchange for monetary compensation. However, copyright protects only the expression of ideas, not the ideas themselves, and does not shield against the independent creation of similar works. Patents, in contrast, provide broader protection by granting exclusive rights to prevent others from making, using, selling, or offering to sell the patented invention, regardless of whether the infringement was intentional or independently created. While patents are generally more robust, they require rigorous examination processes, including a demonstration of the invention’s novelty, inventive step, and in many jurisdictions—such as the EU—a “further technical effect” in the case of computer-implemented inventions. These requirements make obtaining a patent for software both costly and time-consuming, which may not align with the rapid pace of technological advancements and software obsolescence.

    Although copyright offers a longer duration of protection (life of the author plus 70 years in many jurisdictions) compared to patents (typically 20 years), this advantage is less significant in the fast-evolving software industry. Additionally, the lack of registration requirements makes copyright more accessible and cost-effective, whereas patents necessitate substantial financial and administrative resources, often creating barriers for smaller enterprises.

    Given the distinct strengths and weaknesses of each framework, both copyrights and patents play vital roles in protecting software. However, the limitations of copyright, especially its inability to address independent creation and technological piracy, lead many companies to prioritize patents. Yet, the fragmented global patent regime remains a significant hurdle. A universally harmonized legal framework for patenting software could address cross-border enforcement challenges and create a more predictable environment for innovation.

    By Gjorgji Georgievski, Partner, ODI Law

  • In Memoriam: Doubinsky & Osharova Partner and Co-Founder Irina Osharova

    Doubinsky & Osharova has announced that Partner and Co-Founder Irina Osharova has passed away.

    “With deep sorrow, we announce the passing of our dear Partner and Co-Founder of Doubinsky & Osharova Irina Osharova, on January 16, 2025,” a statement from the firm read. “She was an outstanding patent attorney, a talented lawyer, and a true professional. Her contributions to the development of legal practice, as well as her sincerity and dedication to her work, will forever remain in the hearts of those who had the honor of working alongside her. Irina Osharova was involved in volunteering and supported those in need, leaving a lasting impression of humanity, kindness, and generosity. We extend our condolences to her family, friends, and everyone who knew and appreciated Irina Osharova. Her bright memory will live on in our hearts forever.”

    “Unfortunately, her heart could not withstand it… A heart filled with love for people, care for each of us, devotion to her country, profound respect for her profession, and sincere admiration for art,” said Managing Partner Michael Doubinsky. “She didn’t just shine – she burned brightly, living life to the fullest and feeling everything deeply within her soul… She will forever remain an example for us. Her passion and dedication were boundless. Indescribable sorrow… Eternal memory…”

  • Recent Changes to Hungary’s EPR System: New Sanctions and a Shift from Environmental Product Fees to EPR

    In 2023, Hungary introduced the Extended Producer Responsibility (EPR) system, which places the financial responsibility for the waste management of circular products on producers.

    The EPR system encompasses a wide range of product streams, including packaging, single-use and other plastic products, electrical and electronic equipment, batteries and accumulators, motor vehicles, tyres, office paper, advertising paper, cooking oil and fat, textile products and wooden furniture. Producers, or in the case of foreign manufacturing, the first domestic distributor of such products, are required to comply with registration, reporting and EPR fee payment obligations.

    From dual obligations to sole EPR compliance

    A significant recent change in the regulatory framework is the removal of the dual obligations that previously applied to certain products. Prior to the recent amendments, products such as packaging, batteries, electrical and electronic equipment, tyres, office paper and advertising paper were subject to both the environmental product fee and the EPR system. These parallel responsibilities created an excessive compliance burden for the affected businesses while securing no additional tax income for the state budget.

    With the recent revisions, the environmental product fee payment obligation has been eliminated for these products, and producers are now only required to comply with the EPR system. While this simplifies the regulatory landscape by removing overlapping obligations, it also places greater emphasis on ensuring compliance with the EPR rules.

    Changes in sanctions for non-compliance

    Failure to meet the EPR registration, reporting or fee payment obligations can result in substantial financial penalties. Businesses that fail to register are required to pay retroactive EPR fees for the products placed on the market before registration.

    Another key change introduced by the amendments is the imposition of stricter sanctions for non-compliance with EPR reporting and fee payment obligations. Effective from 1 April 2025, if a producer fails to meet its reporting and fee payment obligations, or if false data is provided leading to a lower fee payment, the competent waste management authority may impose a fine. This fine will be determined by multiplying the difference between the actual quantity and the reported quantity by half of the unit fee established for the relevant product stream. Thus, fines can quickly escalate, especially for businesses with large product volumes.

    Timely registration, accurate reporting and diligent EPR fee payments are essential to avoid significant fines and penalties. As Hungary’s EPR system continues to evolve, seeking legal advice and proactively managing compliance will be critical to mitigating financial and reputational risks.

    By Viktoria Hiesz, Attorney at Law, and Barbara Darcsi, Associate, Schoenherr

  • Serban Paslaru Promoted to Equity Partner at Tuca Zbarcea & Asociatii

    Tuca Zbarcea & Asociatii has promoted Serban Paslaru to Equity Partner.

    According to the firm, Paslaru is “one of the main coordinators of the firm’s projects in public procurement, concessions, public-private partnerships, and labor law.” He has been with Tuca Zbarcea & Asociatii since the firm’s inception in 2005 and has been a non-equity Partner since 2009. 

    “The founders’ unanimous decision to promote Serban to Equity Partner was primarily driven by his exceptional professional and personal qualities,” commented Managing Partner Florentin Tuca. “Over the past 20 years, Serban has had an impressive career path and achieved outstanding results. With this promotion, we are sending an important signal to the next generation of lawyers that we truly value partners who aspire to take on more prominent roles in the firm’s management. Together with the eight founding partners, Serban will actively contribute to shaping the strategic business plans of Tuca Zbarcea & Asociatii.”

    “I am happy to be with Tuca Zbarcea & Asociatii since its establishment, and to contribute to the firm’s achievements in all these years spent together.,” added Paslaru. “Throughout all this time I have been fortunate to have had the opportunity to work with amazing people and to be involved in so many challenging projects. I feel excited to join the executive management and continue to contribute to the success of our firm.”

  • DWF and Dentons Advise on Eiffage Immobilier Polska’s Sale of Built-to-Rent Project to Heimstaden Bostad

    DWF has advised Eiffage Immobilier Polska on the forward sale of a build-to-rent residential project in Warsaw’s Praga-Polnoc district to Heimstaden Bostad. Dentons advised Heimstaden Bostad.

    According to DWF, the development consists of 185 apartments plus commercial units and parking facilities. As the general contractor, Eiffage Polska Budownictwo will handle construction. 

    The DWF team included Partners Joanna Wojnarowska and Adrian Jonca, Local Partner Weronika Roesler, Counsels Pawel Bialobok and Katarzyna Stec, and Senior Associate Marcin Wasilewski.

    The Dentons team was led by Managing Counsel Jaroslaw Stapel.

  • Significant Changes to the Taxation of Vehicles

    By passing the proposed bill on 25 November 2024, the Hungarian Government enacted significant changes to the taxation of company vehicles, set to take effect in 2025 and beyond. These modifications aim to increase tax revenues and promote the adoption of environmentally friendly vehicles.

    Increase in Company Car Tax Rates

    As of 1 January 2025, company car tax rates will rise by approximately 20%. The monthly tax amounts will vary based on engine power and environmental classification.

    Inflation-linked adjustments

    As of 2026, car registration tax rates and the company car tax rates will be adjusted annually based on the inflation rate recorded in July of the preceding year. The Hungarian tax authority will publish the updated rates by 15 December 2024 and for the upcoming years by October 31.

    Changes to hybrid vehicle tax exemptions

    Hybrid and plug-in hybrid vehicles registered by 31 December 2024, will retain their exemption from vehicle and company car taxes until 31 December 2026. However, vehicles registered after this date will not qualify for these exemptions, reflecting a policy shift to phase out tax benefits for hybrid vehicles in favour of fully electric or zero-emission vehicles. Benefits for plug-in hybrids have already been limited last fall, as cars registered after 1 September 2024 will no longer receive green license plates, thereby losing the free parking option. On plug-in hybrids with a green license plate, the old one must be replaced by 30 November 2026 at the latest.

    Implications for businesses

    These tax changes present both challenges and opportunities for businesses operating company fleets. The increased tax burden necessitates careful financial planning. To optimize expenses, businesses might consider diversifying their fleets to include more cost-effective or sustainable, low-emission models.

    VAT reclaim opportunities

    As a positive note, the Government has extended the provision allowing businesses to reclaim 50% of the VAT on operational leasing fees for company cars without maintaining detailed travel logs for an additional 3 years. This measure offers some relief amidst the increasing tax obligations.

    By Borbala Maglai, Attorney at Law, KCG Partners Law Firm

  • GKC Partners and Kilinc Law & Consulting Advise on Koni Teknik Muhendislik’s Acquisition of Socar

    White & Case Turkish affiliate law firm GKC Partners has advised Koni Teknik Muhendislik on its acquisition of all of the share capital of Socar Turkiye. Kilinc Law & Consulting advised Socar and its affiliates Bursagaz and Kayserigaz.

    Koni Teknik Muhendislik is a subsidiary of Aksa Natural Gas.

    Socar Turkiye holds an 80% stake in natural gas companies Bursagaz and Kayserigaz.

    The GKC Partners team included Partner Emre Ozsar, Associates Asli Gulum, Umut Korkmaz, and Batuhan Akarsu, and Legal Intern Said Emir Bodakci.

    The Kilinc Law & Consulting team included Partner Seray Ozsoy Yavuz and Senior Associates Gokce Ergun, Demet Ozkahraman Akcaalan, and Oguzcan Dozcan.

  • Walless and TGS Baltic Advise on Ebury’s Acquisition of ArcaPay

    Walless, working with Reynolds Porter Chamberlain, has advised Ebury on the acquisition of Lithuania-based ArcaPay. TGS Baltic advised ArcaPay.

    Ebury is a financial services company.

    ArcaPay specializes in international payment solutions.

    The Walless team included Partners Andrius Ivanauskas and Joana Baublyte-Kulviete and Senior Associates Migle Jeremiciute and Viktorija Dusajeva.

    The TGS Baltic team included Partners Zygimantas Stankevicius and Indre Barauskiene and Senior Associates Paulius Dabulskis, Ruta Tikuisyte, and Rasa Blinstrubiene.