Category: Hungary

The Hungarian Ministry of National Economy published a bill to amend the ESG Act on 21 March 2025, simultaneously launching a public debate on the proposal. According to the official justification, the amendment aims to optimise the ESG reporting framework for sustainability aspects of Hungarian enterprises, to further strengthen the competitiveness of enterprises and to reduce the reporting and administrative burden on enterprises.

The simplification package of the European Union can be seen as a precursor to the proposed amendment to the Hungarian ESG Act. According to the EU Competitiveness Compass published on 29 January 2025, the Commission will deliver an unprecedented simplification effort. To ensure sustained and measurable efforts over the years ahead, the Commission has set ambitious quantified targets for reducing reporting burden: at least 25% for all companies and at least 35% for SMEs. Further to this, the EU Competitiveness Compass states that the 25% and 35% burden reduction targets should, in the future, refer to the costs of all administrative burdens, and not only reporting requirements.

Although the Hungarian ESG Act is not directly derived from EU legislation, in line with the Commission’s objective, the Hungarian ESG Act also needed to be amended to ensure the competitiveness of enterprises in Hungary. Based on the proposal, large companies covered by the ESG Act will be given an additional period of two years to prepare their first audited ESG report, while Hungarian micro, small and medium-sized enterprises will be fully exempted from all ESG data provision under the ESG Act until mid-2027 and will only be required to complete a significantly shortened questionnaire thereafter. Based on the given additional two-year preparation period, large companies covered by the ESG Act would have to publish their first ESG report in 2028. Another significant change is that the corrective measures that enterprises have to take in certain cases would be mitigated.

Most of the amendments would enter into force on the third day after publication of the final act. However, the content of the proposal may change as a result of the opinions received during the public debate, which lasted until 29 March 2025, so it is worth monitoring the progress.

By Tamas Zsiros, Associate, KCG Partners Law Firm

In recent years, the European Union has paid special attention to the management of non-performing loans (NPLs), as these loans significantly impact the economic and financial stability of member states. As part of this effort, (EU) Directive 2021/2167 was introduced, which member states were originally required to implement into national law by 29 December 2023. However, in Hungary, the draft law aimed at implementing the directive was only presented to Parliament in March 2025.

The draft law concerning credit servicers and credit purchasers of non-performing credit agreements may bring significant changes to the current regulations on debt purchasing and debt management, as well as to the operations of market participants involved in these activities. The aim of the legislation, in line with EU objectives, is to facilitate the transfer of NPLs from credit institutions, establish a unified legal framework for credit servicers and credit purchasers and ensure the protection of consumers– particularly borrowers.

Accordingly, the draft law provides detailed regulations on debt management (credit servicing) and debt purchasing activities related to non-performing loan agreements or receivables arising from them, outlining the licensing and supervisory requirements for the involved parties.

Regarding licensing obligations, the draft law introduces new terminology and distinguishes between credit servicers and credit purchasers. A credit servicer is a legal person that, on behalf of the credit purchaser, commercially manages non-performing loans, including collecting or recovering payments, renegotiating terms with borrowers and enforcing claims. This essentially aligns with the current debt management activities. The credit purchaser, on the other hand, is a market participant (natural or legal person) that buys non-performing credit agreements or claims arising from them but does not engage in credit servicing activities itself. While credit servicers are required to obtain a license from the Hungarian National Bank, being the supervisory authority, credit purchasers do not need such a license if they do not engage in direct debt management activities.

This regulatory approach marks a significant departure from the logic of the current law on credit institutions and financial enterprises, which has previously required a license for debt purchasing, regardless of who manages or collects the debt. Under the new regime, the regulation will be divided: different licensing provisions will apply to debt purchasing and debt management, depending on whether the debt relates to non-performing credit agreements covered by the draft law or arises from other sources such as intercompany lending, performing loans, leasing, factoring or other non-financial services. These types of receivables will continue to be governed by the current regulations for credit institutions and financial enterprises; acquiring or purchasing them will remain subject to licensing.

This new dual regulatory system presents several challenges for the Hungarian market. The parallel application of different licensing and supervisory requirements may impose significant administrative and financial burdens on market participants, while the complexity of compliance and record-keeping obligations could create bureaucratic hurdles. Furthermore, the overlap of different regulatory frameworks may lead to legal uncertainty, making it more difficult for stakeholders to fully comply with the statutory requirements.

In addition, in line with the EU directive, the draft law allows for cross-border credit servicing activities. This means that credit servicers operating in EEA member states will be able to offer services in Hungary and vice versa, Hungarian credit servicers will be able to enter the markets of other EEA countries. This provision is expected to stimulate market competition, potentially creating more favourable conditions for borrowers in the long run. Additionally, credit institutions or financial enterprises that already hold a lending or debt purchasing license under the current law on credit institutions and financial enterprises will be able to conduct credit servicing activities without needing a separate license from the Hungarian National Bank.

It is important to note that the draft law may still change in the near future based on any amendments submitted. However, it is already advisable for market participants to closely monitor developments, as they will be the ones who need to adapt to the new regulatory environment once it is implemented.

By Gergely Szaloki, Senior Associate, and Noemi Csiki, Associate, Wolf Theiss

On 11 March 2025, the Ministry of National Economy and the National Tax and Customs Administration of Hungary published an opinion regarding the taxation of assigning dividend claims into a trust structure.

Under the Personal Income Tax Act, if an individual has exercised his/her right of disposition over the valuable consideration that comprises the revenue before the actual receipt of that income, the time of exercising that right shall be considered the time of income acquisition – and thus the point when the tax liability arises. However, the second sentence of the same subsection of the Act states that the conclusion of a trust, creation of a foundation (joining a foundation) shall not be considered as exercising the right of disposition in respect of the private individual, acting as principal, or the founder (joining member) of a foundation.

This can be grammatically interpreted as allowing an exception to the general rule, meaning that placing an asset representing income, such as a dividend claim, into a trust does not trigger tax liability. Accordingly, the tax on dividend, which would typically be borne by the private individual, were not paid in practice.

However, in its new opinion mentioned above, the Tax Authority overruled this interpretation by referring to the relevant justification of the Act. It emphasizes that according to the justification, “the purpose of the provision is to ensure that the private individual who is the settlor does not incur a tax liability about the income generated by the assets placed in trust”, and from this it concludes that the exception applies exclusively to the tax liability on the future income of the assets – in this case, the dividend claim –, meaning that it does not relate to the tax liability arising from the placement of the dividend claim, which forms part of the initial capital, into the trust, thus excluding its application.

According to the Tax Authority’s audit plan for 2025, trusts and the related transactions potentially related to tax avoidance will be subject to increased scrutiny.

By Krisztian Kiralyvolgyi, Attorney at Law, KCG Partners Law Firm

Despite a reduction in single-bid contracts, the GVH proposes additional measures to improve competition and transparency.

According to the recently completed accelerated sector inquiry by the Hungarian Competition Authority (GVH), the share of single-bid public procurements decreased in both the overall Hungarian public procurement market and the market for diagnostic medical imaging equipment between 2021 and 2023. This aligns with the Hungarian Government’s commitments to the European Commission. In its report, the GVH made additional proposals to further reduce the number of single-bid public procurement contracts.

1. Focus on single-bid procurements

In 2023, the Hungarian Government adopted an action plan aimed at increasing competition in public procurement procedures. One of its key objectives was to significantly reduce the proportion of tenders receiving only one bid – an indicator often associated with reduced market competition and higher procurement costs. To implement this plan, Government Resolution 1082/2024 (III. 28.) was adopted, mandating the GVH to conduct three sectoral inquiries into markets where single-bid procurement is particularly prevalent. The diagnostic imaging equipment market was the first to be examined. The sector inquiry targeting the market for medical imaging equipment (such as MRI, CT, ultrasound and general radiology machines) was initiated in September 2024. The GVH’s investigative approach was robust, involving unannounced inspections at major domestic suppliers, information requests to both public and private healthcare providers and consultations with key regulatory bodies.

2. Accelerated sector inquiry

An accelerated sector inquiry is a procedure defined by the Hungarian Competition Act, aimed at identifying market problems in situations where circumstances suggest a distortion or restriction of competition and urgent intervention is therefore justified. During the inquiry, the GVH uncovers the underlying causes of the distortion by analysing information collected from market participants in order to take the necessary steps to eliminate these issues. After completing the information-gathering phase and analysing the data, the GVH summarises the results of the accelerated sector inquiry in a public report.

3. Key findings

The GVH concluded that the incidence of single-bid procurements had declined across the public procurement landscape, including within the diagnostic imaging equipment market, due to the following reasons:

Adoption of pre-market consultations by contracting authorities to gauge supplier interest and promote competition.

• Voluntary declarations of ineffectiveness for tenders receiving fewer than two bids.
• Increased oversight from the Public Procurement Authority, consistent with the National Anti-Corruption Strategy 2024–2025.
• According to data from the Hungarian Public Procurement Authority, in the national procurement procedures, the share of contracts resulting from single-bid procedures decreased from 24.8% to
• 11.7%, while the proportion of single-bid contracts under EU procurement procedures fell from 38% to 27.9%.

4. Recommendations for further improvements

Despite this progress, the GVH found it necessary to communicate additional measures that could help further reduce the number of single-bid procurements, such as:

For contracting authorities:

• Split bidding in package offers: Allow suppliers to bid on parts of a package rather than the entire bundle, opening opportunities for more participants.
• Enhanced market engagement: Ensure early and meaningful dialogue with market players and industry associations during the planning phase.
• Documented preliminary market consultations: Emphasize transparency and adherence to integrity and competition laws when interacting with potential bidders.
• Declaration of ineffectiveness: Apply this legal instrument systematically when fewer than two bids are received.

For public oversight bodies:

• Scrutiny of bundled procurements: Examine the necessity and legality of bundling contracts to avoid discouraging potential bidders.
• Monitoring compliance with preliminary market consultation obligations: Ensure authorities meet legal requirements to consult the market before launching tenders.

5. Next steps

In March 2025, the GVH launched another accelerated sector inquiry to investigate the causes of single-bid public procurement procedures in the market for passenger and commercial vehicle acquisitions. Simultaneously with the launch of the procedure, the authority’s investigators conducted unannounced on-site inspections at multiple locations.

Overall, one of the key takeaways from the GVH’s first sector inquiry into single-bid public procurement procedures is that companies participating in public procurement should prepare for increased scrutiny, mandatory pre-market consultations and evolving tender structures.

By Miriam Fuchs, Senior Associate, Wolf Theiss

Pontes Budapest has advised Emeren Group on project financing in Hungary for its 52.4 megawatt-peak solar portfolio, secured in collaboration with Raiffeisen Bank Hungary. 

According to Emeren Group, this financing package supports five operational solar farms and underscores the company’s commitment to renewable energy, contributing to its regional growth and development initiatives.

Pontes did not respond to our inquiry on the matter.

The expansion of renewable energy sources, particularly photovoltaic (PV) systems, has been a cornerstone of Hungary’s strategy to diversify its energy portfolio and achieve sustainability objectives. However, the inherent variability of solar power generation presents challenges for maintaining grid stability and ensuring a reliable electricity supply.

To address these challenges, the development of battery energy storage systems (BESS) co-located with solar power plants (i.e. cable pooling) has become increasingly important. Until now, however, the co-located BESS systems have been under-regulated and the numerous divergent and grey-zone practices have created uncertainty in the market, hindering the development of such systems. The changes introduced last week finally clarify and establish key steps for such developments.

Historically, Hungary’s regulatory framework did not provide clear guidelines for the integration of co-located BESS projects. This lack of specific regulation created uncertainty for investors and developers, hampering the widespread adoption of these energy storage solutions. While the concept of electricity storage was introduced into Hungarian law earlier, comprehensive policies to support the deployment of co-located BESS systems were lacking. Recent regulatory developments, particularly the amendments to the Hungarian Electricity Act and the subsequent updates to the Hungarian Transmission System Operator MAVIR’s Operational Code, have now established a more accommodating framework for the deployment of these systems. These regulatory advancements provide much-needed clarity and support for the development of co-located BESS projects. This approach not only enhances grid stability but also maximises the utilisation of renewable energy, contributing to a more resilient and sustainable energy system.

Key regulatory developments

The Hungarian Electricity Act was amended in early 2025 to include regulations concerning the shared use of producer lines and grid connection points by multiple power plants or BESS systems, each with a nominal capacity of at least 0.5 MW and owned by different entities. These rules mandate that such entities must establish an agreement governing the shared usage of the producer line and the grid connection point. However, the detailed regulations governing such usage – particularly the connection of generation or BESS assets owned by different entities to the same grid connection point – were not adequately addressed, leaving a grey area in the regulatory framework.

To address this, last week MAVIR, introduced amendments to its Operational Code to facilitate such co-location arrangements. These amendments allow third-party entities to connect generation or BESS assets to the grid using the grid connection point and feed-in capacity allocated to the original grid connection point owner. This co-located grid connection procedure is structured along the following key steps:

(a) Concluding a grid connection sharing agreement: The parties must enter into an agreement regarding the use of the shared producer line and grid connection point. The duration of such an agreement must be a minimum of 5 years and the law specifies the minimum content requirements for agreements regarding such shared use.

(b) Notifying HEPURA of the conclusion of the grid connection sharing agreement: The parties must notify the Hungarian Energy and Public Utility Regulatory Authority (HEPURA) of the conclusion of the agreement by submitting it to HEPURA. In the grid connection procedure, this notification must also be verified.

(c) Method of the system usage fee allocation: The parties must decide how the system usage fees will be allocated and paid. The fees can be settled between the parties themselves or the two separate entities may each settle independently with the relevant network operator based on the metering installed at the grid connection point.

(d) Method of capacity utilisation: The parties must outline how the available capacity at the grid connection point will be jointly utilised, taking into account any feed-in capacity limitations.

(e) Preparing a single-line diagram: A schematic, including the interface point (in Hungarian: “kapcsolódási pont“) of the BESS asset and the shared grid connection point, must be submitted to the competent network operator. This schematic must be suitable for the preparation of the technical-economic information sheet (in Hungarian: “műszaki-gazdasági tájékoztató“).

(f) Declarations from the operator: If the operator of the shared producer line and the grid connection point differs from the entity entitled to the available feed-in capacity, declarations confirming the operator’s awareness of the co-location request and the safe operability of the shared infrastructure following the implementation of the BESS asset are also required.

Implications for stakeholders

In summary, the foregoing changes are extremely important for the development of BESS systems, as they aim to clarify the previously divergent practices and uncertainties and establish a procedural framework that supports – and give a boost to – their development. This is especially important for maintaining grid stability, as these systems store excess energy produced during peak sunlight hours and release it during periods of high demand or low generation, thereby smoothing out fluctuations and enhancing the dispatchability of renewable energy.

Additionally, integrating BESS systems with renewable energy projects presents stakeholders – including developers, investors, utilities and local communities – with a range of operational, financial and regulatory considerations. For developers and investors, co-location can improve project economics by utilising existing grid connections and optimising land use, potentially reducing capital expenditure. However, this approach necessitates detailed planning to address technical challenges, such as ensuring compatibility of electrical connections and managing the complexity of grid-sharing agreements when multiple entities are involved. These agreements must clearly define responsibilities for maintenance, capacity usage and liability allocations, in order to prevent disputes and ensure smooth operations. Furthermore, developers must navigate regulatory requirements, including securing the appropriate licenses and adhering to evolving legislation governing energy storage and grid integration.

Therefore, while these developments present significant opportunities, they also introduce complexities. The novelty of the regulations and the presence of unresolved issues necessitate careful navigation. Stakeholders must adapt to a rapidly evolving regulatory landscape, where recent amendments have introduced new requirements and procedures that can be challenging to interpret and implement. These changes, along with the evolving nature of the regulations and the presence of certain grey areas, highlight the importance of informed legal guidance. We remain available to offer tailored assistance to stakeholders as they navigate this evolving regulatory environment, helping them to understand and comply with these new requirements and supporting the smooth implementation of their projects.

By Adam Lukonits, Senior Associate, and Virag Locsei, Associate, Wolf Theiss

Employer of record (EoR) services are becoming increasingly popular for companies looking to expand rapidly internationally. This allows a company to enter a market and recruit workers in another country quickly, efficiently and at lower cost without setting up a subsidiary. As with any panacea, however, it is important to be careful.

What exactly is EoR?

Under the EoR service, the EoR service provider provides a workforce in a particular country for its client. The EoR service provider will be the employer of the workers recruited abroad, and the local legal and administrative obligations related to the employment will be borne by the EoR service provider. EoR services typically include recruiting workers, conducting background checks, onboarding workers, drafting and concluding employment contracts, administrative tasks related to payroll and taxation, administrative management of benefit packages and termination of employment.

For whom and why is the EoR service good?

In most cases, entering a foreign market is time-consuming and costly: finding the right legal form, setting up the company, renting offices, recruiting and training employees, setting up the administrative background all take time. This is where EoR helps, as it allows for virtually instant market entry, as a company wishing to serve a given market does not need to go through any of the above stages.

The EoR service is of particular interest in the tech world, for start-ups and other growth entities where there is either no definitive vision of entering and establishing a presence in a given market, or an urgent need to recruit people with knowledge of that market, for example because of a new project opportunity. Using the EoR service in such cases will not only make it easier and cheaper to start up the service, but also to potentially terminate it at a later stage.

What should be considered when designing the structure?

The EoR service is essentially based on a contract between the service provider and the customer. On the other hand, the EoR provider will conclude an employment contract with the employees concerned. In some cases, there may be a tripartite contract between the parties involved, or even a multi-country framework contract between the EoR provider and the client’s parent companies for the provision of such services.

An important question in the design of EoR services is who has the power to instruct, manage and supervise workers and how the possibility of termination of employment is developed. In these areas, it is particularly important to define the liabilities of the parties. For example, it is often the case that the EoR provider is forced to rely on the grounds for termination provided by the client. If, however, a claim is subsequently made against the EoR provider for this reason, it is appropriate to shift the responsibility for this back to the client.

The application of certain provisions protecting the economic interest of the client is also important. For example, the customer may require that an employee employed through the EoR accepts a confidentiality or non-competition obligation. As the customer does not have a direct contractual relationship with the employee, the enforceability of this must also be ensured by the contract with the service provider.

Where are the dangers?

The biggest problem with EoR services is that they can be reclassified as temporary agency work, depending on the rules of the jurisdiction. Temporary agency work is a regulated service, the entities providing it are usually subject to registration, there is additional administration, authorities have increased control, and service providers are typically required to provide financial security. Furthermore, some countries’ rules impose time limits on the possibility of temporary agency work. Therefore, EoR providers generally want to avoid that their activity slides into temporary agency work.

The dividing line between the two types of service should be examined on a country-by-country basis. In most cases, it is a question of how deeply the foreign employee is integrated into the client’s organisation. The stronger this integration, the greater the risk that the contract can be reclassified as temporary agency work.

A number of other considerations may also be relevant to the question of reclassification. In particular, from whom and how the employee receives instructions, how similarly the employees perform their work compared to other employees of the client, who provides the work equipment. But equally important may be the extent to which the remuneration for the service is aligned with the client’s wage costs: if it is essentially determined by the parties on a cost-plus basis, this would be an argument in favour of the temporary agency work nature of the agreement.

It is not all the same from a tax point of view

In addition to the reclassification as temporary agency work, the scheme may also carry tax risks. Even if the client does not want to establish a permanent establishment in the country of employment, the use of the service may give rise to a tax establishment. In such a case, the profits from the activity may be taxable in the country of employment abroad. This risk may arise in particular if the foreign employees are employed at a fixed place of business or if the foreign employees play a significant role in the employer’s contracting with foreign customers.

Where does it work?

The extent to which an EoR service works well in a particular country is mostly determined by the economic and market conditions in that country, the regulatory approach and the weight of the risks involved. For example, within Europe, the market for EoR services is thriving in some countries, such as Denmark, Finland, Sweden or the Netherlands, where the legal risks involved are low. In other European countries (e.g., Germany, Spain, Italy, the Czech Republic and Poland), the need for caution and prudence is much greater and the options are therefore more limited. EoR services are also becoming increasingly attractive in a number of economically important countries outside Europe, in particular Australia, China, Singapore, Hong Kong and the United Arab Emirates.

By Zoltan Tarjan, Senior Associate, Jalsovszky

The Government of Hungary has recently adopted Government Decision 1089/2025 (III. 31.) on the country’s Cybersecurity Strategy, effective between 2025–2030.

The Strategy is an essential read for legal practitioners, cybersecurity professionals, and public or private sector stakeholders, as it lays down a comprehensive and binding national framework aligned with the EU’s NIS 2 Directive, integrating cybersecurity into public administration, critical infrastructure, digital services, and supply chains. It provides the regulatory context and legal obligations stemming from the Cybersecurity Act of 2024, including compliance, liability, certification, and enforcement mechanisms. It also outlines strategic and operational priorities—such as CSIRT structures, sectoral responsibilities, and incident response coordination—while also offering a roadmap for technological resilience and institutional preparedness. Overall, the Strategy serves as a practical reference point for navigating Hungary’s cyber governance model, ensuring regulatory alignment, risk management, and the secure digital transformation of both state and market actors. The Strategy is a transformative instrument that redefines cybersecurity in Hungary not just as a technical or defence-related issue, but as a core pillar of national policy.

Hungary’s strategy aims to build resilient cybersecurity capabilities, protect digital well-being, raise cybersecurity awareness, and foster cooperation across government, industry, and society. As digitalization accelerates, the strategy recognizes both the economic potential and increasing security risks associated with interconnected systems, ICT services, and state-sponsored cyber operations. To remain secure and competitive, Hungary seeks robust legislative frameworks, international collaboration aligned with EU and NATO standards, and joint responsibility among stakeholders.

Geopolitical tensions, cybercrime, disinformation, and data vulnerabilities represent key threats. The pandemic has intensified digital dependency and disrupted societal trust, while supply chain and infrastructure security now require urgent attention. Hungary’s approach includes not only defensive capabilities but also deterrence, intelligence-led threat identification, and the coordination of crisis-specific responses. The strategy emphasizes that cyberattacks could, under certain conditions, trigger collective defense under NATO.

A strong focus is placed on innovation and cooperation. Priorities include trust-based information sharing, practical cybersecurity guidelines, public-private collaboration, and AI-based solutions for early detection and prevention of cyberattacks. Special support is planned for SMEs, especially those in supply chains. Cybersecurity awareness is to be promoted through national education and training programs, with a security-by-design mindset embedded into public education. A state-run bug bounty program and vulnerability disclosure framework support ethical hacking, as laid out in Hungary’s Cybersecurity Act.

National cybersecurity certification schemes will be developed in line with EU standards to address ICT product and service risks. Independent assessments will ensure product quality and reliability, particularly in critical sectors. Certified solutions will be prioritized in public procurement, enhancing both market performance and the competitiveness of Hungarian-made technologies.

The strategy also supports the secure adoption of cloud services through certifications, best practices, and alignment with the EU Cloud Services Scheme. These measures aim to improve procurement decisions and enable knowledge transfer, particularly in education and public administration. Enhancing cloud and data regulation will safeguard national sovereignty while enabling advanced technology adoption.

To support Hungary’s growing digital economy, especially software development, the strategy calls for financial and regulatory support for SMEs. Public-private funding models and EU funds will be leveraged to expand cybersecurity capabilities.

Sector-specific priorities are also identified. The digital infrastructure sector — viewed as the backbone of cyberspace — requires standardization, resilience, and consolidation in the public domain to enable efficient cybersecurity. In healthcare, digitalization increases cybersecurity risks, making compliance with security regulations critical for trust in e-health systems. Agriculture, with its vast and sensitive data ecosystem, also demands protection to ensure data confidentiality and economic stability.

The space sector, due to its strategic role in national operations and civilian services, now faces full-spectrum cyber threats across its value chain. The Strategy Articulates that a comprehensive defense approach is needed to protect data integrity and satellite operations. In the energy sector, the integration of renewable technologies and the growing number of distributed networks (e.g., household solar systems) require advanced protection and monitoring systems. Ensuring electricity supply is essential for all digital services, making energy infrastructure cybersecurity a top priority.

Finally, the Wtrategy underlines the need for sustainable, multi-source financing to support all planned cybersecurity initiatives. This includes state budgets, EU funds, and public-private partnerships. Adequate funding will enable capacity building, particularly in areas like education, certification, and critical infrastructure protection.

To implement the Strategy, the Cybersecurity Commissioner — along with relevant ministers — are tasked with developing the National Cybersecurity Action Plan (2025–2030) and updating the strategy as needed by the end of 2030.

In sum, Hungary’s Cybersecurity Strategy offers a comprehensive framework to address current and emerging threats, while fostering innovation and ensuring national sovereignty in the digital space. By aligning sectoral actions with international best practices, Hungary aims to lead in both resilience and digital competitiveness across Europe and beyond.

By Tamas Bereczki and Adam Liber, Partners, Provaris

 

The Hungarian Government is committed to reducing environmentally harmful activities and protecting the environment. However, fines imposed by environmental authorities for violations related to environmental permits, noise pollution and air quality have remained unchanged for 15–20 years. The Government expects all investments to meet the highest environmental standards, and under the “polluter pays” principle, non-compliant companies will face penalties.

A draft legislative proposal, currently open for public consultation by the Department of Energy, introduces stricter measures, including increased environmental and waste management fines, higher penalties for sewerage violations, public disclosure of major environmental offenders, and on-the-spot fines for illegal waste disposal. Under the proposal, fines will rise significantly, at least doubling and, in some cases, increasing up to fortyfold, based on the severity of the infringement. The revised regulations will also differentiate penalties for individuals, small and medium-sized enterprises (SMEs) and large corporations.

Key changes include for example that if an investor starts or continues an activity requiring an environmental permit without obtaining one, the daily fine will increase to HUF 100,000 – 1 million (EUR 250 – 25,000). Or, if a business has the required permit but fails to comply with its conditions, SMEs will face fines ranging from HUF 500,000 to HUF 20 million (EUR 1,250 – 50,000). For large companies, the maximum fine will be 5% of their net turnover from the previous year, capped at HUF 2 billion (EUR 5 million).

The proposed legislation also establishes stricter rules for major environmental violations. According to a draft government decree, companies fined HUF 50 million (EUR 125,000) or more in a given year will face additional legal consequences. Similarly, strict treatment applies to individuals, where the priority category applies to fines above HUF 10 million (EUR 25,000). Businesses or individuals committing serious environmental offenses will be publicly named, with details recorded in the Register of Administrative Sanctions. The environmental authority will also inform the Minister responsible for the environment, and the Ministry will publish the offender’s details online. Furthermore, the Environmental Protection Agency may suspend a business’s operations until the violation is rectified.

These amendments aim to strengthen enforcement, ensuring penalties align with the severity and scale of violations. Following public consultation, the finalized legislation is expected to be published in the Official Journal within weeks.

By Denes Glavatity, Attorney-at-Law, KCG Partners Law Firm

Over the past years, the number of casual and seasonal employees in Hungary has reached nearly 320 thousand, however, according to the Government, many employees are only registered as such because of the tax benefits associated with the forms of simplified employment.

Casual employment means any employment relationship between the same parties that lasts for a maximum of 90 calendar days per annum in total and a maximum of 15 days per month in total if none of its continuous periods exceeds 5 calendar days. Seasonal employment allows employment relationships between the same parties for a maximum of 120 days per year in total; its two main types are agricultural and tourism.

Since February 2025, the daily tax rate payable by the employer in respect of these employment relationships has increased as a result of an amendment to the Act on Simplified Employment. For seasonal work, the daily tax rate has increased from 0.5 to 0.75% of the minimum wage (HUF 2,200); for casual work, from 1 to 1.5% (HUF 4,400). The daily tax rate on the casual work of film industry extras has not changed: it remains 3% (HUF 8,700). From February, the calculation basis of pensions will be 2.1% of the minimum wage (6,100 HUF) per day for seasonal work; 4.2% of the minimum wage (12,200 HUF) per day for casual work, and 2.8% of the minimum wage (8,100 HUF) per day for casual work as a film extra.

From July 2025, if an employee works more than once in casual work, seasonal work or both per calendar year, the combined duration of these employment relationships may not exceed 120 days per calendar year. The purpose of this rule is to prevent employers from registering ‘normal’ employment (that is out of the scope of the Simplified Employment Act) as if it were casual or seasonal work to obtain a tax advantage. Nevertheless, until July, the Ministry of National Economy may fine-tune the amendment to ensure that it does not impose a disproportionate administrative burden on casual and seasonal employees.

By Levente Csengery, Partner, KCG Partners Law Firm