Category: Hungary

As of 23 January 2017, a new, user-friendly website equipped with innovative searching functions was introduced for civil society and other organisations (excluding companies) to fulfill their disclosure requirements.

The following documents will be published on the new website: announcements regarding mergers and demergers of civil society organisations; orders relating to registration, amendment notification and admission to the public-benefit register of associations, foundations and sport clubs; decisions in bankruptcy, liquidation, winding-up and property distribution proceedings for civil society organisations.

The orders, announcements and the civil society organizations’ reports will be published both on the National Register’s online data sheet and on the new interface among the list of search results, where it will be possible to search for a specific publication and also for its type.

The updated website is available at the following link: http://birosag.hu/allampolgaroknak/civil/civil-szervezetek-orszagos-nevjegyzekenek-kozzetetel-keresoje  

By Levente Csengery, Partner, KCG Partners Law Firm

At the beginning of February 2017, the Hungarian Ministry of National Development published a summarizing report on the companies’ obligations to provide information for consumer protection.

From 1 January 2017, the institutional system of consumer protection authorities has been altered and the district offices became the general authorities. As a result, consumers have the opportunity to deal with their consumer protection cases in the office nearest to their residence.

The Ministry summarised the information to be made available for the customers: a company having a shop shall indicate visibly and legibly the address of its seat, as well as its address, phone or email contact details that may be used by consumers in case of a complaint. In addition, the seat, phone and internet contact and the postal address of the competent conciliation panel („békéltető testület” in Hungarian) shall also be indicated in the shops. In case there is a security service working in the shop, the consumers shall be informed about its name, seat and the regulations of its operation affecting the consumers.

The Ministry highlighted that no fine will be imposed by consumer protection authorities at the time of the first inspection in case the company failed to provide the necessary information. The authority will only notify the company about the failure at the time of the first infringement by the small or medium-sized enterprises.  

By Rita Parkanyi, Attorney, KCG Partners Law Firm

A novelty introduced in 2017 was that tax returns prepared by the tax authority will be available for tax payers online on the so-called “Ügyfélkapu” from 15 March 2017.

Tax payers, who has no online personal access on “Ügyfélkapu”, may request the tax authority via text message (SMS) (phone number: +3670 717-78-78) and also personally or in writing to send the draft tax return by post. It is important to include in the SMS the tax payer’s tax registration number and date of birth, as the tax authority can send the draft only to identified tax payers.

Another new possibility for individuals and sole-proprietors that they can pay their tax debts online or via bank card. The different taxes (like personal income tax and health contribution) may be paid together by one transaction, thus, the bank transfer costs can be minimized. It is important that the service requires registration on “Ügyfélkapu”. The tax authority introduces the new payment possibility gradually: the payment packages can be prepared and the transactions can be completed since the end of January, whilst the payment obligations resulting from the electronic tax returns can be paid on the so-called “webNYK” surface from 15 March 2017.  

By Gabriella Galik, Partner, KCG Partners Law Firm

Hungary’s current Act on Civil Litigation Procedures was adopted in 1953, and it served courts, counsels, and parties in litigations well over decades of the socialist regime.

Following the political changes in 1990 the Act has been amended over a hundred times to adapt to the completely re-structured economic and social environment. Over the past decade it has become obvious that the more and more complex and challenging commercial and legal disputes beg for a modern and completely renewed procedural act that is capable of creating balance between the need for an expeditious and professional resolution to cases and that of safeguarding the parties’ rights and equitable interests on an impartial basis.

Lawmakers have recognized the need for a comprehensive change. Work on a new procedural act began in 2013 and became very intensive in 2014. In addition to the Ministry of Justice, over 100 external advisers, multiple committees, and numerous working groups have contributed to the codification. All civil judges have received the opportunity to express their views on the concept, and editors have taken their comments into account. In preparation of the concept many foreign procedural codes were scrutinized, including those of Germany, Austria, Switzerland, and several CEE countries, although preserving Hungary’s procedural traditions and proven instruments has remained a priority.

In January 2015 the Government approved the concept of the new act, and a detailed draft was submitted to Parliamentary debate in early September of this year. The new Act on Civil Litigation Procedures will enter into force on January 1, 2018, and will apply to all cases commenced after that time.

The new Act’s innovations rest on three pillars: division of process, support in expediting the process, and active judge control.

The most significant change will be the introduction of the division of process in time and function. Following the lodging of the statement of claim the case will start with a preparatory phase and will continue with a distinct evidentiary phase. The purpose of the preparatory phase will be to identify the substance and the procedural framework of the legal dispute as early as possible. In this phase parties will have to make their full statements of facts and law, make all procedural motions, and submit all available evidence. All these statements and matters will be heard at a preparatory hearing in which further statements will be possible, but once the preparatory hearing is closed, statements and motions will not be altered. The evidentiary phase will be based on these established statements and motions, and its function will be to consider and rule on evidence.

It will be a fundamental principle of the new Act that parties must fully support the expeditious conduct of the case, that they must make their statements and submit their evidence in a timely manner and in good faith, and that their statements must reflect the truth. Failure to observe these rules will result in fines and other sanctions.

The principle and specific rules of active judge control will authorize judges to efficiently apply all reasonable tools to expedite the case, in particular to clarify contradictions between a party’s statements, call parties to supplement their statements, give directions on evidentiary matters, set the legal framework of the case, and promote the appropriate exercise of parties’ procedural rights.

Another long-awaited innovation is the increased efficiency of interim measures. Under the existing Act interim measures may not be applied for prior to the lodging of the full statement of claim. The new Act opens a path for interim measures to be filed before the full statement of claim is submitted, provided that the applicant demonstrates that any delay in granting an order on interim measures would render its purpose impossible. This new instrument is expected to give applicants a much more efficient tool to safeguard their rights and interests in cases where time is of the essence.

The new Act will introduce class actions, for the time being only for consumer and labor disputes and only where at least ten claimants wish to pursue claims arising from the same facts and rights. Fundamentals of expert evidence giving will be renewed as well by the testimony of party-appointed private experts receiving full competence and credibility.

Lawmakers’ expectation for the operation of the new Act is that cases will be made significantly shorter and that judicial decisions will be much more reliably founded on the bases of commercial reasonability and professionalism for the satisfaction of all legal practitioners.    

By Zoltan Faludi, Office Managing Partner, and Gabor Bardosi, Counsel, Wolf Theiss Hungary

This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

From 2017, the Hungarian tax authority prepares the draft tax returns for the personal income tax based on the amendment of the act on the rules of taxation entered into force on 1 January 2017.

Accordingly, the tax authority will prepare 3.8 million draft tax returns, which will be available online by personal access on the so-called “Ügyfélkapu” from 15 March 2017. Those who have no access on “Ügyfélkapu”, until 15 March 2017 can request the tax authority to send it via post, and it will be also available at the call centers.

The tax authority prepares the draft tax return based on the available data, thus, it is not aware of incomes in relation to which it has not received any information during the year. Therefore, it is highly recommended to check the draft whether any amendment is needed, since tax payers remain liable for the correctness of the tax return.

It is important to emphasize that sole proprietors, small-scale agricultural producers and persons subject to VAT payment have to prepare their tax return on their own.  

By Gabriella Galik, Partner, KCG Partners Law Firm