Category: Hungary

The grace period until 30 June 2024 is slowly expiring for manufacturers to market products that do not yet comply with the Deposit Refund System (DRS) rules.

The essence of the DSR rules is that certain products, described below, are subject to mandatory refunds and therefore the manufacturer increases the price of the product by a certain amount of money to facilitate recycling. The legislator hopes that this will lead to a much higher proportion of consumers returning these products in order to encourage recycling.

The DSR rules are in force from 1 January 2024 and apply to ready-to-drink or ready-to-drink beverage products (except milk and milk-based products) packaged in plastic (PET), metal or glass base materials and with a capacity of 0.1 to 3 litres. The DRS fee is currently HUF 50. Following the logic of the regulation, if the final consumer returns the product, it will be returned to the manufacturer, who will be able to refill a part of it after an appropriate procedure. The other part of the products – where refilling is not possible due to the quality or quantity of the plastic – is processed and incorporated into different plastic products (the new DRS rules will only apply to the latter, as this plastic is considered waste after returning it).

As of 15 November 2023, manufacturers are already required to register their products, with notification required 45 days before the products are placed on the market, the grace period for this is going to end on 30 June 2024. Products for which this registration obligation has not been fulfilled are not to be placed on the market and will be subject to a mandatory recall. The producers are obliged to advance the HUF 50 fee for the products to the waste management concessor (MOHU Zrt.). If the product is not returned, the HUF 50 fee remains with MOHU. This is a clear incentive for manufacturers to encourage consumers to return as many products as possible. It is mandatory to allow for returns in grocery stores with a floor area of more than 400 square meters, which can be purchased by the stores concerned from MOHU.

By 2029, the EU target is for at least 90% of products covered by the DRS to be redeemed, with the exception of small producers (who place on the market less than 5,000 units of products otherwise covered by the DRS).

By Bálint Éberhardt, Attorney at Law, KCG Partners Law Firm

Lakatos Koves and Partners has promoted former Counsel Peter Berethalmi to Partner in the firm’s Corporate and M&A group.

Former Nagy & Trocsanyi Managing Partner Peter Berethalmi joined LKT as Counsel in early 2024 (as reported by CEE Legal Matters on January 26, 2024). Before the move, Berethalmi spent 28 years with Nagy & Trocsanyi. He started his career in 1995, spending a year in-house with Shell.

“We are thrilled to welcome Peter as a Partner in our Corporate and M&A group,” said Managing Partner Peter Lakatos. “His extensive experience and deep understanding of the legal landscape will continue to enhance the quality of service we provide to our clients. Peter’s promotion is a testament to his hard work, dedication, and exceptional legal skills.”

“I am honored and excited to take on the role of Partner at LKT,” added Berethalmi. “This is a significant milestone in my career, and I look forward to contributing to the firm’s continued success. I am grateful for the opportunity to work with such a talented team and to support our clients in achieving their business goals.”

Oppenheim has advised Audi Hungaria on the tendering procedures, negotiations, and EPC and PPA agreements related to its photovoltaic power sources.

According to Oppenheim, “Audi Hungaria installed around 160,000 square meters of photovoltaic equipment on the rooftop of its logistics center in 2020. The company is starting to erect another solar power plant: the new solar power plant will be built on nearly 85,000 square meters on the rooftop of the vehicle assembly building, and, on 75,000 square meters, in the dedicated part of the Audi-site’s green area.” The firm added that, according to the newly concluded agreement, in the next 25 years, Smart Solar Kft. will provide renewable energy to the company located in Gyor with the new, 18-megawatt power plant. 

The Oppenheim team included Partners Gergely Legradi and David Hanis.

A bill amending certain laws affecting the functioning of the state was adopted by the Parliament in the middle of June 2024. The bill postpones again the entry into force of the new Land Registry Act to 15 January 2025. In addition, the bill amends provisions in several different areas of law (e.g. health, education, immigration).

For instance, the bill would allow the extension of mandatory health examinations. Currently, only up to the age of 18 are the screening tests mandatory, however, a decree of the Minister responsible for health may provide for mandatory screening tests without age limit.

The bill would facilitate the adoption of newborn children left in hospital. The child would be adoptable if the mother or another relative of the child did not show up within six weeks. The bill also establishes a unified system of rules on objects that may not be brought onto the premises of certain educational institutions (prohibited) and objects that may be brought onto the premises of certain educational institutions but are restricted in their use. The bill lays down rules on the liability of educational institutions for damage caused to the objects taken over.

Furthermore, the Public Finance Act is also supplemented with the provision that the Metropolitan and County Government Office may waive, in whole or in part, a claim of the State in respect of certain housing state aid and the baby loan scheme under the equity procedure. The detailed rules of the equity procedure will be regulated by a Government decree.

The bill also transposes the rules of the Government decree on the different application of the Social Contribution Tax Act during emergency into the Social Contribution Tax Act, according to which, for example, tax liability also arises on the taxable part of the interest income of a natural person in Hungary, with the exception of interest income from units in real estate funds. 

By Lidia Suveges, Attorney at law, KCG Partners Law Firm

Approximately 1.5 million condominiums are affected by an amendment of the Condominium Act regarding the registration of common representatives.

According to the latest change, effective as of 1 October 2024, the condominium assembly must immediately and mandatorily dismiss the representative and revoke their property management mandate if the representative does not initiate their registration with the land registry authority within the prescribed deadline following their election.

This registration period opens on 1 October 2024 and closes on 1 May 2025, aiming to ensure transparency and legal oversight over condominiums. The representative’s activities can only be performed after the land registry authority records the appointment in the land registry, on the condominium’s main record.

Regardless of this obligation, the condominium assembly has the right to revoke the mandate of the common representative at any time and to assign another person to perform the tasks. If the common representative’s activities endanger the operation of the condominium and there is no possibility for a replacement, the notary can be requested to take the necessary steps.

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

The amendment to the ESG Act was published in the Hungarian Official Gazette of 17 April 2024 and entered into force in May 2024.

According to the official reasoning of the amendment, the scope of the Act has been clarified, new definitions have been introduced and previously inserted concepts have been specified. The amendment also serves to strengthen the coherence with the sustainability report implemented in the Hungarian Accounting Act in accordance with the CSRD by amending the provisions on the obligation to submit ESG reports.

An important change is that companies can also comply with their ESG reporting obligations by completing the questionnaire annexed to the ESG report. If companies are requested to provide information on the data contained in the questionnaire annexed to the ESG report, the company is required to complete at most such questionnaire or the part of the questionnaire to which the request relates. However, if a company is required by another entity to provide data covered by the ESG Act that is not included in the questionnaire annexed to the ESG report, the entity requesting the data shall submit a request to the authority (SZTFH) under the ESG Act. Where the authority permits the provision of the data requested by the entity, the company shall provide the data as specified in the authority’s decree.

Another significant change is that, similarly to the sustainability report under the CSRD, a subsidiary may be exempted from the obligation to prepare an ESG report under the ESG Act if the parent company’s consolidated ESG report includes the subsidiary concerned and its subsidiaries. This exemption rule applies to the subsidiary concerned only if it notifies the authority of the exemption and the name and registered office of the parent company whose consolidated ESG report contains the subsidiary.

Decrees containing significant supplementary provisions for the application of the ESG Act have not yet been published. Their first publication is expected in summer 2024, therefore it is of utmost important to pay attention to publications on ESG topics.

By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm

Finance Minister Mihaly Varga announced on 4 May 2024 that the Government will prolong the preferential VAT regime for new homes for an additional two years.

This means that until 31 December 2026, newly built apartments (up to 150 square metres) and family houses (up to 300 square metres) will be subject to a VAT rate of 5% (instead of a general rate of 27%). Furthermore, in practice, the reduced rate can be applied up to the end of 2030 for properties for which the building permit or building notification has been issued by the end of 2026.

The reduced rate for new homes was reintroduced in 2021 originally for a 2-year period, that has been continuously extended, now by the end of 2026. The conjunctive pre-conditions to qualify for the preferential tax treatment are basically the same since 2021, as follows:

(1) the building shall be considered as ‘residential property’ under the definition of the Hungarian VAT Act, i.e. any building, which is not necessary for residential purposes is not construed as residential property, even if built adjoining the residential building, such as garages, workshops, shops and farm buildings;

(2) the building shall be considered as newly built under the definition of the Hungarian VAT Act, i.e. sold before first occupation (or within 2 years thereof in some cases);

(3) the transaction (sale of the building or pre-payment, as applicable) takes place within the preferential period by 2026 (eventually by 2030 under the transitional provisions).

By application of the reduced rate, the Government’s aim is to leave HUF 200 billion a year for the people, while also providing significant support to the Hungarian construction industry, which accounts for 6% of the Hungarian economy and provides jobs for nearly 400,000 people, which is why the Government is paying special attention to supporting and developing the sector. According to the announcement, the preferential tax treatment was also supported by professional organisations (ÉVOSZ and MKIK) and the budget provides the necessary resources for the tax cut and the measure does not endanger the deficit target, the finance minister added in a comment to his post.

By Balint Zsoldos, Head of Tax, KCG Partners Law Firm

According to a statement made by the Association of Hungarian Insurers, from 16 July 2024, the range of vehicles for which compulsory motor vehicle liability insurance must be taken out will be extended.

Based on the new provisions of the act on compulsory motor vehicle liability insurance, adopted on 30 April 2024 and published on 9 May 2024, certain micromobility devices, including certain electric scooters, will be covered by compulsory motor vehicle liability insurance. The net weight of the vehicle and its maximum design speed determine whether or not liability insurance is required for the vehicle.

The law defines a motor vehicle as any vehicle that travels on land (but not on rails) and is propelled solely by mechanical power, therefore not human or animal power. This includes all these types of vehicles regardless of their registration status (however, it excludes wheelchair vehicles intended for persons with reduced mobility, pedelec bicycles, and e-mopeds used by persons with reduced mobility). The motor vehicles defined by the law must have a maximum design speed exceeding 25 km/h or a maximum net mass exceeding 25 kg and a maximum design speed of 14 km/h. Additionally, the definition encompasses any trailer or semi-trailer intended for use with the motor vehicle, even if not currently coupled to it.

The association has published a diagram on its website for owners, keepers or users of the vehicles concerned to help them understand whether they may be subject to compulsory third-party liability insurance. It is the responsibility of each operator to check the net mass and design speed of his vehicle. As it is a completely new provision, insurers have a deadline until 8 June 2024 to set their tariffs for micromobility devices and those concerned must have a valid compulsory liability insurance policy from 16 July 2024. According to the law on compulsory motor vehicle liability insurance, the current user of a vehicle that has not been registered, i.e. that does not have a registration number, is also considered the keeper. Therefore, before using a vehicle, it is essential to check whether it is required to have or has compulsory motor insurance.

By Gabriella Galik, Founding Partner, KCG Partners Law Firm

With a new function on the National Tax and Customs Administration’s (NAV) mobile application (“NAV Mobile”), anyone can check whether their employer has notified the tax authority about their employment in accordance with the employment contract.

The services available in the “Employment data” section of NAV-Mobil offer security for all taxpayers, as any changes in their employment relationships, wage and social contribution data can be checked and irregular employment can be detected easily. This is of particular importance as the appropriate notification of the tax authority by the employer about the employment relationship is a condition for health care and later pensions. In addition to being useful for all employees, it is also expected that this very simple application will also have a positive impact on the economy by raising tax awareness among citizens and improving the position of compliant businesses.

The application can be downloaded from the Google Play and App Store app stores. It also includes a number of other functions, such as the possibility to query tax invoices, easy payment of vehicle tax, checking business partners’ details, and many other useful information, calculators and databases to help with taxation.

By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm

The former Noerr Budapest team has joined WTS Legal Hungary, including Zoltan Nadasdy, Viktor Fuzi, and Eszter Hegedus as Partners.

The joining team has merged with the already WTS-affiliated team of Szopkone dr. Horvath Law Firm and will be operating under the WTS Legal Hungary brand with Nadasdy and Fuzi to serve as Managing Partners and Szopkone as a Strategic Partner.

Despite the original plan to transfer to Kinstellar, the Noerr Budapest office announced in May that it will continue as an independent firm from June 1, 2024.