Payment Services Regulation: PSD3 and the PSR

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The European Union’s second Payment Services Directive (PSD2) has had a significant impact on the financial sector, promoting competition and encouraging innovation. Over time, however, a comprehensive review and modernisation of the framework became necessary. This process resulted in the third Payment Services Directive (PSD3) and, as a new legislative instrument, the Payment Services Regulation (PSR).The new framework aims, on the one hand, to further strengthen consumer protection rules, tighten security requirements and continue to support innovation in the field of financial services. Another key objective is to bring payment services and electronic money services under a single legal framework, thereby providing clearer regulation for market participants and consumers alike.

Compared to PSD2, the draft of the new framework introduces a number of innovations.

While PSD2 regulated payment services in a single directive, PSD3 and the PSR split the framework: PSD3, as a directive, must be transposed into the national law of the Member States, whereas the PSR, as a regulation, is directly applicable, increasing legal harmonisation and reducing divergences in interpretation at national level.

It is important to note that under the previous regime, payment services (such as payment initiation and account information services) and electronic money services were regulated in separate directives (PSD2 and EMD2). PSD3 and the PSR, however, integrate these provisions into a single legislative framework.

Another reason for this change was that the separate regulation of electronic money services and payment services caused practical problems, as the boundaries between the two types of services had become blurred. The introduction of a unified framework significantly reduces legal uncertainty.

In line with the previous rules, PSD3 includes within the scope of payment services the maintenance of payment accounts, the execution of various payment transactions – such as credit transfers, direct debits and card transactions – the issuing of non-cash payment instruments, as well as the acquiring of payment transactions. Money remittance, payment initiation services and account information services also continue to fall within this category.

In the area of electronic money services, PSD3 introduces a significant innovation compared to the previous regime by expressly defining these services (namely: the issuance of electronic money, the maintenance of payment accounts containing electronic money units, and the transfer of electronic money units).

PSD3 further broadens the scope of Strong Customer Authentication (SCA), so that the new requirements better reflect the most advanced digital security solutions, such as biometric identification or device-based authentication systems.

In addition, the new framework provides for enhanced cooperation between payment service providers in the exchange of fraud-prevention information. For example, market participants will be required to exchange data in cases where a provider detects a transaction suspected of fraud, thereby reducing the risk of financial crime across the EU market. PSD3 also contains extended refund rights for victims of fraud, enabling misled customers to obtain quicker and more effective redress in disputed cases.

Finally, PSD3 lays down an important transitional provision regarding authorisations already granted for payment services and electronic money services, as the so-called “re-application process” remains part of the framework. Under the original proposal, existing payment institutions and electronic money institutions must comply with the updated regulatory requirements within 24 months from the entry into force of the new framework, and demonstrate this to their supervisory authority by submitting the required documentation. The European Parliament takes a pragmatic stance on this issue, emphasising that supervisory authorities should request only those data and documents which are newly required under the updated rules. The Parliament’s position also allows for the extension of the transitional period, which has been welcomed by the industry. However, despite these adjustments, the general obligation to submit compliance documentation to the supervisory authority, set out in the transitional provisions (Articles 44–45), essentially remains unchanged.

The expected timeline for PSD3 and the PSR is currently as follows:
• The final adoption of the framework is expected to take place in the course of 2026. PSD3 will enter into force after the expiry of the subsequent 18-month transposition period, likely in the course of 2027. In contrast, the Payment Services Regulation (PSR), as a regulation, will become directly applicable in the EU Member States upon its adoption.

dr. Balázs Ferenczy

Introduction of the Condominium Building Right into the Legal System

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The Parliament has adopted the bill on the amendment of certain acts related to the introduction of the condominium building right, thereby officially creating a new concept of property law — the condominium building right — within the current legal system, alongside several other amendments affecting various areas. In addition to the above, the adopted bill clarifies the applicability of the provisions of the Civil Code concerning the building right (explicitly excluding certain rules in the case of the condominium building right), and amends Act C of 2021 on the Land Registry so that the purchasers’ right relating to a future building — similarly to the purchasers’ right linked to retained ownership — may have a suspensory effect for up to six months on subsequently submitted land registry applications.

The essence of the condominium building right is that, in a condominium under construction, an independent, registrable and encumberable property right may be created in favour of the purchaser in respect of a specific apartment that is later to be established as a separate unit under the founding deed. This right automatically converts into ownership upon the actual establishment of the condominium, retaining the same ranking. An important precondition for establishing the condominium building right is that the fact of the preliminary establishment of the condominium must already be recorded on the title deed. The condominium building right may only be created in connection with the sale and purchase agreement (or a closely related separate agreement) relating to the apartment to be built, for the benefit of the purchaser, in exchange for consideration, whereby the amount paid as consideration for acquiring the right is set off against the purchase price of the property to be created. In the event of enforcement proceedings initiated against the property or the insolvency of the owner, the purchaser obtains a position similar to that of a mortgagee, up to the amount of the purchase price already paid.

The building right may be transferred, but only if the obligor of the right, the original beneficiary, and the new beneficiary enter into an agreement in accordance with the rules of contract assignment, under which all rights and obligations arising from the sale and purchase agreement relating to the property are transferred from the original to the new beneficiary. If the sole beneficiary of the condominium building right dies, the right, as a general rule, reverts to the obligor, who must repay to the heir the amount of the purchase price (or the relevant portion thereof) already paid under the sale and purchase agreement, together with interest calculated from the date of payment.

From a business perspective, the purpose of the condominium building right is to make the risks associated with ongoing condominium developments more manageable and to make the well-known pre-sales phase of new-build projects — purchasing “off-plan” — safer. The purchaser does not merely hold a contractual claim but acquires a property-law position over the specific apartment already during construction, linked to the instalments of the purchase price paid, which ultimately converts into ownership. This may reduce risk on the purchaser’s side, thereby increasing the attractiveness of early entry into such projects. For developers, pre-sales and project financing may become more predictable, as purchasers will enter into agreements with stronger legal protection. For banks, the new structure offers opportunities because the condominium building right may be encumbered with a mortgage already during the construction phase, allowing collateral to appear much earlier and in a more structured way.

Overall, the introduction of the condominium building right is a reform affecting several pieces of legislation, aiming to strengthen the position of purchasers, financing banks, and developers simultaneously through a new legal instrument of property law. If it proves effective in practice, this structure may reduce uncertainties surrounding new-build condominium projects, improve purchaser confidence, and — particularly in combination with the Home Start Programme — contribute to making the market for new apartments more predictable, more financeable, and therefore more attractive for purchasers in the coming years.

dr. Martin Gortva / dr. Aliz Orbán

When GDPR No Longer Helps – An Online Casino and the Limits of The Rights of Access

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The European Union’s General Data Protection Regulation (GDPR) represented a major step forward in the protection of personal data, however data subjects often abuse the rights granted to them under the GDPR, which significantly complicates the daily operations of controllers.

A recent judgment has highlighted, that the right of access also has limits. In a case involving an online casino, the Landgericht Dortmund (Dortmund Regional Court) ruled that the rights of data subjects cannot be exercised abusively.

What was the case about?

On 8 of April 2025, the Dortmund court ruled in a dispute concerning online gambling, in which it found that the right of access under the GDPR had been exercised abusively.

The data subject – who had previously played at an online casino – intended to bring a damages claim on the grounds that the casino had operated for a period without a licence in Germany. The player claimed, that during this period he had made significant deposits into the casino but had not lost the full amount in gambling, and therefore the casino was obliged to reimburse the non-lost portion, he thus sought to enforce this loss before the court. However, he was unable to show when and how much money he had lost in total, had no records regarding the games and losses, he could not substantiate either that not all deposits had been lost or to specify what exact amount might still be owed by the casino.

The unfortunate player sought to resolve the issue by relying on the right of access guaranteed under the GDPR. Resourcefully, he reasoned that the GDPR’s definition of personal data also encompassed the games played and their outcomes, and, given that such data would be necessary for the resolution of any potential dispute, he assumed with good reason that the casino retained these records for its own protection. Accordingly, the individual exercised the possibility guaranteed under the GDPR and submitted an access request to the casino, seeking disclosure of all data relating to him, including the records of games and losses, in order to calculate the exact amount he might claim back.

However, his plan failed at the first step: the casino rejected his request, considering it abusive, and refused to disclose the data, arguing that the applicant intended to use them not for purposes consistent with the objectives of the GDPR, but rather for the preparation of litigation to be initiated on a basis independent of the GDPR.

The data subject considered the casino’s refusal unlawful and therefore brought the matter before the court, requesting the disclosure of the data and, if the data showed that the casino indeed owed him money, a judgment ordering repayment of the non-lost amounts. Contrary to the plaintiff’s expectations, the court ruled in favour of the casino, holding that the request constituted an abuse of rights, and consequently dismissed the claim for payment in the absence of the data.

Why was it considered abuse?

According to the article 12 (5) (b) of the GDPR, controllers may refuse to act on request for access where the request is “manifestly unfounded” or “excessive.” The court interpreted this provision of the GDPR as not being exhaustive or exclusive, holding that a controller may also lawfully refuse to comply with a request for access in other circumstances where the request amounts to an abuse of rights.

The judgment emphasised that the purpose of the right of access is not to enable a person to use the GDPR as a means of evidence gathering prior to or during litigation, but rather to ensure the transparency of processing operations and to allow the data subject to verify whether processing is carried out lawfully and in accordance with the information provided by the controller. This is also reflected in the preamble 63 GDPR, which states that “A data subject should have the right of access to personal data which have been collected concerning him or her, and to exercise that right easily and at reasonable intervals, in order to be aware of, and verify, the lawfulness of the processing.” However, in this case the plaintiff did not seek to verify what data the casino held about him or whether it was lawfully processed – but merely wished to determine how much money he had lost and to use this information as the basis for a damages claim.

The court further compared the situation at issue with other, similar contexts in which the data subject does not have access to his or her own data. typical example is access to health data: a patient often cannot access, and does not hold, all information, test results or medical records concerning him or her. In such cases, the patient genuinely has no other realistic possibility than to rely on the data stored by the physician, and it cannot reasonably be expected that the patient would maintain records, even retrospectively for several years. By contrast, in the court’s view, a player – who could have kept records of his gambling losses himself – is not in the same situation of necessity.

Therefore, the court found that the plaintiff’s request went beyond the purpose of the right guaranteed by the GDPR, and that such an exercise of the right amounted to an abuse of rights. This judgment represents a rare example of a court refusing to grant the right of access on the ground of abuse of rights.

The judgment is of particular significance because, in general, courts tend to side with data subjects and interpret the concept of “abuse of rights” narrowly. In this instance, however, the Dortmund court underlined that:

• The GDPR cannot be used for every purpose, in particular not for the preparation of civil lawsuits.
• The legal instruments established for the protection of personal data do not replace the information-gathering mechanisms available under civil procedural law.

This serves as a warning to both to data subjects and lawyers: the GDPR is a powerful tool, but not a Swiss Army knife to be deployed for any purpose.

The Court of Justice of the European Union (CJEU) has held in several cases (e.g., in C-307/22, C-416/23, C-38/21) that EU law prohibits the abusive exercise of rights. This general principle has now also been applied in the context of the GDPR in an individual case.
 
What does this mean for us in Hungary?

Given that the decision was rendered in Germany, it has no direct effect on Hungarian users for the time being. In the case the practice will be adopted, the GDPR will continue to protect the rights of data subjects, if we wish to know what personal data a controller holds about us, on what legal basis, and for what purposes it is used, we are entitled to request access. However, such an access request should be used for the genuine purposes of the GDPR. This, for example, if we want to verify whether an online store has deleted our old address, or if we suspect unlawful processing, it is entirely appropriate to submit a request. What will likely not be permissible is to use the GDPR as a “weapon” or a loophole. If we intend to bring an action against someone but do not know exactly what we want to claim, the necessary information and evidence should be obtained under the rules of civil procedure, not by abusing the instruments of data protection law.

dr. Kitti Humbert / Zoltán Fischer

Pay Transparency Directive: On its background and the possibilities for exemption from some of its provisions

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The European Union’s Pay Transparency Directive 2023/970 brings significant changes for employers (and employees). The aim of the regulation is to promote the principle of “equal pay for equal work” and to highlight gender pay gaps. Although the largest administrative burdens will fall primarily on larger employers with at least 100 employees, smaller companies will not be unaffected either. EU member states must implement the Pay Transparency Directive into their national legislation by 7 June 2026, which means that these rules will likely be applicable to domestic employers starting from next summer.

Companies with fewer than 100 employees are not subject to the regular pay gap reporting obligation and are not required to conduct joint pay assessments with employee representatives if there is an unjustified difference of at least 5% between the average pay levels of female and male employees. Furthermore, these employers will not be required to submit data to the authorities or disclose pay differences. The opposite is true for larger employers, who, in addition to pay assessments, must also develop corrective and preventive measures to ensure equal pay in accordance with the directive. We note that Hungarian regulations may also lay down rules that are stricter than those in the directive, and may even impose the same rules on all employers, but the likelihood of such stricter regulations is very low. Regardless of this, the long-term impact of the directive is likely to affect these employers as well, since, as explained below, employees may request information about their pay.

 Rules from which there are no exceptions

It is important to note that the general transparency rules of the directive apply to all employers, regardless of size. Job applicants must always be informed in advance of the starting salary or salary range, and gender-neutral language must be used in both job advertisements and job titles. Applicants may not be asked about their previous or current pay. The criteria used to determine the remuneration, pay levels and pay increases of employees must be defined by each employer in an objective and gender-neutral manner and made easily accessible to employees. At the request of the employee, employers will be required to disclose data on the employee’s individual pay level and the average pay level of colleagues performing the same or equivalent work, broken down by gender. Furthermore, contrary to current general market practice, employees will not be prohibited from discussing their pay with each other or even disclosing it. It is important to note that in the event of a legal dispute, the employer will have to prove that there was no discrimination.

 

How should the number of employees be calculated?

Presumably, from the date of entry into force of the legislation, the number of employees will have to be determined based on the definition in Act XXXIV of 2004 on small and medium-sized enterprises and the promotion of their development (SME Act), so even smaller employers may be subject to the stricter provisions of the legislation due to the group level calculation.

What does it mean in practice?

While larger companies will have to regularly collect data, prepare reports, and take action based on them, for smaller businesses, the regulation means ensuring transparency in their day-to-day operations. Although they have no administrative reporting obligations, they will have to operate their labor market presence and internal remuneration systems in a much more transparent manner in the future.

For this reason, it is advisable for all employers to start preparing for the legislative changes, especially in case of certain HR processes.

dr. Zsófia Somlóvári / dr. Bence Tóth

The Risks of Labor Market Restrictions on Competition

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In recent years, both national and EU competition authorities have increasingly focused on labor market restrictions, particularly wage-fixing agreements and no-poach agreements.

Although these types of clauses are commonly used in transactions involving the sale of corporate shares (M&A), IT service contracts, and cooperation framework agreements, they may raise serious concerns from a competition law perspective. Therefore, individual assessment is always recommended. The Directorate-General for Competition of the European Commission generally considers wage-fixing and no-poach agreements to be restrictions of competition “by object,” and provides very limited room for alternative classifications or for proving their lawfulness.

Typically, such an agreement may be considered acceptable from a competition law perspective if it is linked to the main agreement between the parties and complies with the requirement of proportionality, which must be assessed on a case-by-case basis.

According to last year’s Competition Policy Brief, the European Commission has not yet issued a formal decision on wage-fixing or no-poach agreements, but it is actively investigating such cases and has also conducted unannounced inspections (so-called dawn raids) in this area. The Commission has also noted that, based on the case law of the Court of Justice of the European Union, such agreements are likely to qualify as restrictions of competition by object under Article 101 TFEU. This means that in investigations against companies entering into such agreements, the competition authority may establish an infringement through a more formal procedure, without having to assess the actual effects of the agreement—potentially leading to the imposition of significant fines. Several national competition authorities (e.g. Slovakia, Portugal, Lithuania) have already taken action against labor market restrictions and imposed fines amounting to millions of euros. The Hungarian Competition Authority (GVH) has also investigated a case involving a no-poaching clause, which resulted in a fine of several billion HUF.

In some cases, due to the long-term nature of cooperation between certain economic operators, such restrictive clauses may fall into oblivion or the current management may not even be aware of their existence. However, this does not constitute an exemption from the supervisory authority’s action.

In light of the above, we recommend that our clients consult an expert to assess the legal compliance of their existing or future contracts and, if necessary, amend any problematic agreements to ensure compliance with both competition and labor law requirements.

Litigation-Related Legislative Changes in January and February

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With effect from 28 January 2025, the court fees for initiating first-instance proceedings will be changed. This change will make it cheaper to initiate lower value claims, while higher value claims will become more expensive. As a result, alternative dispute resolution methods, particularly arbitration, may become more popular. From 8 February 2025, the Hungarian Supreme Court’s guidelines on attorneys’ fees will essentially be elevated to the level of legislation. As a result, prevailing parties can expect greater reimbursement of legal fees as part of litigation costs.

Changes to Court Fees

Currently, the court fee for initiating first-instance litigation is generally 6% of the claim value, capped at HUF 1,500,000. This means that even if the plaintiff’s claim is worth hundreds of millions of forints, the fee cannot exceed HUF 1,500,000 (approx. EUR 3,800).

However, from January 28, 2025, the court fee structure will change significantly. The legislator will abolish the HUF 1,500,000 cap and the 6% fee system. Instead, a nine-tier system will be introduced as follows:

Claim Value Fee Amount
Up to HUF 300,000 HUF 18,000
HUF 300,001–3,000,000 HUF 18,000 + 4.5% of the amount over HUF 300,000
HUF 3,000,001–10,000,000 HUF 139,500 + 5% of the amount over HUF 3,000,000
HUF 10,000,001–30,000,000 HUF 489,500 + 7% of the amount over HUF 10,000,000
HUF 30,000,001–50,000,000 HUF 1,889,500 + 4.5% of the amount over HUF 30,000,000
HUF 50,000,001–100,000,000 HUF 2,789,500 + 2.5% of the amount over HUF 50,000,000
HUF 100,000,001–250,000,000 HUF 4,039,500 + 2% of the amount over HUF 100,000,000
HUF 250,000,001–500,000,000 HUF 7,039,500 + 0.5% of the amount over HUF 250,000,000
Over HUF 500,000,001 HUF 8,289,500 + 0.5% of the amount over HUF 500,000,000

 

For disputes related to residential property, if the claim value does not exceed HUF 250,000,000 (approx. EUR 620,000), half of the above fees, but at least HUF 489,500 (approx. EUR 1,300) must be paid.

In smaller-value cases (e.g., claims between EUR 20,000 and EUR 40,000), the court fee will decrease slightly compared to the current fee. However, for claims exceeding EUR 63,000 the fee will start to increase. For significant disputes with a claim value over EUR 1,200,000 initiating litigation will become considerably more expensive.

There is a growing consensus that parties will increasingly turn to alternative dispute resolution methods, such as arbitration and mediation, to resolve their disputes. The legislative change may also encourage parties to settle their disputes out of court.

It is important to note that the legislative change does not affect the fees for second-instance or review procedures. The fee for second-instance procedures remains 8% of the claim value, capped at HUF 2,500,000 (approx. EUR 6,300) and the review fee remains 10% of the claim value, capped at HUF 3,500,000 (approx. EUR 8,800). The change also does not affect the fees for cases where the fee is specifically determined by law (e.g., divorce cases).

Changes to Attorney Fees

If a party is represented by an attorney or law firm during litigation, the attorney fees are agreed upon in the engagement agreement between the client and the attorney. The agreement may include a fixed fee for the entire procedure, hourly billing, fees for specific procedural stages, or success fees.

Parties can claim the attorney fees stipulated in the engagement agreement as litigation costs or request the court to determine the attorney fees based on the claim value.

For a long time, judicial practice has reduced the claimed attorney fees, often preventing the prevailing party from passing the full cost onto the losing party. However, in the spring of 2024, the Hungarian Supreme Court significantly changed this practice (Pfv.II.20.887/2023/6).

The Hungarian Supreme Court ruled that fees based on hourly billing can only be reduced if they are significantly different from market rates and are clearly unreasonable. The court emphasized that the number of pages in submissions or the number of hours spent in hearings cannot be the basis for determining attorney fees, as other tasks (e.g., client consultations, preparation, document review) are also involved. The quality of the attorney’s work cannot be evaluated either, as this could lead to the conclusion that the attorney’s work was inadequate despite winning the case.

According to the Hungarian Supreme Court’s guidelines, the court’s reasoning for reducing litigation costs must be based on specific case data. This emphasis on detailed reasoning and the criteria set forth clearly favour prevailing parties, allowing them to pass on a greater portion of the attorney fees to the losing party than previously possible.

The Hungarian Supreme Court’s decision is precedential, and lower courts are expected to follow it. Most courts apply the Supreme Court’s guidelines, although there are occasional deviations.

Recognizing these developments, the Ministry of Justice has elevated the Supreme Court’s guidelines to the level of legislation with the issuance of IM Decree 17/2024 (XII.9.), effective from February 8, 2025.

Under the new decree, attorney fees can still be charged based on the engagement agreement between the attorney and the client, but there will also be the option to charge fees based on the claim value.

In the future, courts will have a much narrower scope to reduce the attorney fees claimed in litigation.

A significant change is that courts can only reduce the attorney fees claimed by the prevailing party at the request of the opposing party. The new regulation specifies two reasons for reducing attorney fees: if the fees are unrelated to the rights being enforced and therefore unnecessary, or if they are disproportionate to the actual work performed.

A key limitation is that attorney fees charged based on the engagement agreement can generally only be reduced by up to 50%. Greater reductions are only possible in exceptional cases where the fees are excessively high and unreasonable compared to market rates. The legislator has essentially elevated the Supreme Court’s requirements to the level of legislation by mandating detailed reasoning.

We believe that the legislative change regarding attorney fees will increase the likelihood that prevailing parties will be able to pass the full cost of attorney fees onto the losing party.

If you have any questions regarding litigation or dispute resolution, please do not hesitate to contact our colleagues.

This summary is for informational purposes only and does not cover all relevant issues. It does not constitute legal advice.

 

Group Layoffs Expected in Hungary – The State of the Automotive Industry and a Regulatory Overview

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  • Summary of Recent Events

The automotive industry is undergoing a challenging transformation worldwide. Due to declining demand, cost rationalization has come to the forefront, significantly impacting employment. Unfortunately, this trend is also evident in Hungary, where changes in the global automotive sector have a severe impact on domestic jobs, the affected employees, and, consequently, the national economy.

  • Legal Framework of Group Layoffs (short) 

    I. Definitions and Thresholds

In light of the above, we summarize how Hungarian law regulates group layoffs.

Group layoffs do not apply to smaller employers. The minimum thresholds and the definition are provided under Section 71 of the Hungarian Labour Code (Mt.). According to this provision, group layoffs occur when, within a 30-day period, the employer plans to terminate employment relationships due to reasons arising from the employer’s operations, based on the average statistical headcount of the previous six months, in the following proportions:

  • 10 employees, if the employer has a workforce of 20-99 employees,
  • 10% of the workforce, if the employer employs 100-299 employees,
  • At least 30 employees, if the employer has a workforce of 300 or more employees.

It follows from the above that companies operating with fewer than 20 employees are not subject to the statutory rules on group layoffs, even if the employment relationship of the entire workforce is terminated.

When calculating the thresholds for group layoffs, it is important to consider the rule that if the employer initiates another termination or mutual agreement to end employment within 30 days after the last termination due to reasons related to the employer’s operations, these numbers must be aggregated.

II. Procedure

a. Consultations with the Works Council

The employer is required to consult with the works council and provide written notification of the planned group layoff at least seven days prior to the start of the negotiations.

The purpose of these negotiations with the works council is to develop an agreement aimed at avoiding the group layoff or, if avoidance is not possible, mitigating its adverse consequences.

If the parties fail to reach an agreement, the layoff process can still proceed. The employer’s obligation to negotiate remains in effect for at least 15 days following the start of the consultations, even if no agreement is concluded.

b. Notification to the State Employment Body

The employer is obligated to notify not only the works council but also the state employment body of its intention to carry out a group layoff. A copy of this notification must also be provided to the works council.

The same notification obligation applies regarding any agreement reached with the works council and the employer’s decision to implement the layoff.

c. Decision, Employee Notification, and Communicating Terminations

The decision must specify the number of employees affected by the layoffs, broken down by employment categories, as well as the timeline of the layoffs, divided into 30-day periods. Any breach of the employer’s notification obligations renders the termination unlawful.

The affected employees must be informed of the decision in writing at least 30 days before the termination. It is crucial to assess any restrictions on termination at this point in time (i.e., when the notification is issued, not when the termination is actually communicated). For instance, if an employee is not pregnant at the time of notification but is pregnant by the time the termination is communicated, this fact will not prevent the termination.

  • Summary

Based on recent developments in the automotive industry, Hungary is also regrettably expected to face group layoffs. The rules of the Hungarian Labour Code, briefly outlined above, provide clear guidelines for conducting this process. Proper notification, adherence to the obligation to negotiate, and compliance with the timeline are key factors throughout the procedure.

TEÁOR’25: New codes for companies from 2025

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From 1 January 2025, a significant change will enter into force for enterprises: the introduction of TEÁOR’25, an updated version of the Hungarain activity classification. This means new TEÁOR codes for all companies, which will be automatically modified and registered by the Hungarian Tax Authority (HTA).

What happens to the TEÁOR codes?

  • Automatic transfer: until 31 January 2025, the HTA will amend the TEÁOR codes identifying the main activities and other activities that can be converted to the new TEÁOR’25 system based on a conversion table. The HTA will also register these changes in the company register.
  • Registration obligation:
    • If a company intends to change the main activity code that has been automatically converted by the NAV, the company must register it by 1 July 2025 at latest, based on the new TEÁOR’25 codes.
    • Other activities not automatically converted must also be registered by 1 July 2025.
  • Automatic deletion: TEÁOR codes identifying other activities that cannot be converted based on the conversion table will be deleted by 31 August 2025.

What must be done in relation to the amendment of the articles of association?

The articles of association must also be amended to comply with the new TEÁOR’25 codes.

Deadline for this:

  • The amended articles of association must be submitted no later than the first data change in the company register after 1 July 2025.

It is important to note that if the amendment of the articles of association is solely to comply with TEÁOR’25, the request for registration of the change may be submitted with no payment of fee and publication cost.

The current state of crypto-assets regulation in Hungary

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  1. Act VII of 2024 and MiCA

The regulation of cryptocurrencies and crypto-assets in Hungary is continuously evolving to align with EU legislation and technological advancements. Hungary’s legal framework is anchored in Act VII of 2024 on the Crypto-Assets Market, which provides comprehensive regulations regarding the issuance of certain crypto-assets and the provision of related services. Moreover, the European Union’s regulation of crypto-assets is governed by the MiCA Regulation (Markets in Crypto-Assets; REGULATION (EU) No 2023/1114 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010, as well as Directives 2013/36/EU and (EU) 2019/1937).

The Hungarian Crypto Act is fundamentally grounded in the MiCA Regulation and stipulates the obligation to apply it through a separate legislative act, while also detailing the supervisory rules governing crypto-assets.

While the MiCA Regulation applies to individuals involved in the issuance, public offering, and admission to trading of crypto-assets, or those providing services connected to crypto-assets within the European Union, the scope of the Hungarian Crypto Act covers the issuance of crypto-assets in Hungary, their public offering or admission to trading, crypto-asset services conducted within Hungary, as well as the supervisory activities carried out by MNB (Hungarian National Bank).

The Hungarian Crypto Act and the MiCA aim to establish uniform rules for, among other matters, the issuance of certain crypto-assets, the public offerings of crypto-assets and the admission of crypto-assets to a crypto-asset trading platform, as well as certain related services. The MiCA furthermore aims to ensure investor protection and imposes transparency and reporting obligations on market participants.

  1. Anti-money laundering rules

The Hungarian Act on the Prevention and Combating of Money Laundering and Terrorist Financing (Pmt.) continues to play a pivotal role in crypto-asset-related activities in Hungary. Crypto-asset providers must adhere to strict anti-money laundering regulations, conduct thorough customer identification, and report any suspicious transactions.

  1. Role of the MNB and licensing guidelines

MNB (National Bank of Hungary) is responsible for supervising the entities, persons and activities subject to the Crypto-Assets Market Act. MNB issues guidelines for crypto-asset issuers and crypto-asset service providers, providing clear guidance on the authorization process and compliance requirements. MNB has issued guidelines in the following areas, with further expansion anticipated:

  1. Notification of asset-backed token by a credit institution
  2. Notification of asset-backed token issuance
  3. Notification of public offering or admission to trading of e-money tokens

During the authorization and notification process, MNB pays particular attention to preserving financial stability and ensuring that investors are adequately protected.

However, according to MNB’s current Rules of Organization and Operation, no separate department has been set up to perform tasks related to crypto-assets.

  1. Tax aspects of crypto regulation

The tax implications of crypto-assets in Hungary are favorable for individuals and companies engaged in crypto-asset trading.

  1. Taxation of natural persons

Under the 2022 amendments, profits earned by individuals from trading crypto-assets are subject to a 15% personal income tax (PIT). The tax base is calculated by aggregating the profits and losses from all transactions conducted during the tax year, with related costs — such as the purchase price of the crypto-assets or mining expenses — taken into account. This simplified tax form makes the use of cryptocurrencies more favorable for individual investors.

  1. Taxation of companies

For companies, profits from crypto-asset transactions are subject to corporate tax (TAO), which is 9% in Hungary. This makes the country particularly competitive for cryptocurrency-based businesses, as it offers one of the lowest corporate tax rates in the EU.

  1. Why should you apply for a crypto license / issuance in Hungary?

Hungary offers numerous advantages for the issuance of crypto-assets and related services:

  1. Favorable tax conditions: the 15% personal income tax and 9% corporate tax are particularly attractive for both individuals and companies. This makes Hungary one of the most favorable tax environments in the EU.
  2. A strong legal framework and EU-compliant regulation: the stable legal framework provided by Act VII of 2024 on the Crypto-Assets Market, and the MiCA Regulation, along with the detailed guidelines of the MNB, create a secure and transparent operating environment for market participants. Consistency with the EU regulations ensures that crypto-asset service providers operating in the Hungarian market can compete at EU level.
  3. Supporting innovation and fintech development: the MNB supports fintech companies and innovation, fostering the spread and advancement of technologies related to crypto-assets. The transparency and flexibility of the authorization process allows crypto-asset providers to operate on a legally secure basis.

Hungary could therefore be an ideal location for the issuance and licensing of crypto-assets, as it offers competitive tax environment and EU-compliant regulatory framework for market participants.

The challenges of the Guest Investor Program: The unanswered questions and obstacles behind a stuttering start

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The Guest Investor Program, which has been known to many as the „Golden Visa”, which has been the subject of considerable interest and several amendments since its announcement, has been officially launched on 1 July 2024, giving third country investors the opportunity to apply for a guest investor visa and, on the basis of that, for a 10+10-year guest investor residence permit.

Despite of the legal provisions, investors are forced to wait for the effective launch of the program and before making their investments, the reasons and circumstances of which dr. Martin Gortva, Head of the Global Mobility Practice Group of our Kapolyi Law Firm will try to explore and describe in the paragraphs of this article.

The guest investor program

As a first step in the analysis of the situation, it is necessary to have a brief review of the main rules of the program, which has been amended several times. The main condition for obtaining the guest investor residence permit, in addition to meeting other, mainly technical and (national) security requirements, is that the guest investor makes one of the following investments, as defined by law:

  1. acquisition of real estate fund shares of a minimum value of EUR 250 000 in a fund registered with the National Bank of Hungary and managed by a fund manager that meets and complies with certain requirements; or
  2. acquisition of a residential property in Hungary, registered in the land register with and under its own topographical lot number worth at least EUR 500 000;
  3. making a financial donation of at least EUR 1 000 000 to support educational, scientific research or artistic creation to an institution of higher education maintained by a public trust with a public-service mission.

A third-country national wishing to obtain the guest investor residence permit must first apply for a guest investor visa with a validity of 6 months, the precondition of which is the implementation of one of the investments set out above or, alternatively, a submission of a written commitment and declaration to carry out at least of the investments within three months of the issuance of the guest investor visa.

Based on the above, it would appear that everything is in place to ensure that third country investors who wish to obtain a guest investor residence permit and who meet the investment requirements can take advantage of the opportunities offered by the program, however, in practice, the individuals wishing to invest in the first two categories are faced with the fact that the actual launch of the scheme has yet to take place, the circumstances and causes of which we will try to reveal in more detail.

Circumstances regarding investments in real estate funds

The relevant legislation and implementing regulations set out specific rules and requirements – which have been amended several times since the draft legislation was first published and adopted – for both fund managers wishing to participate in the scheme and the real estate funds they manage. One of these significant conditions is that only the acquisition of units distributed by a real estate fund whose fund manager is listed on the so-called “list of qualified market operators” maintained by the Constitution Protection Office is eligible for the scheme. Registration on the list of qualified-market operators is subject to a special preliminary qualification procedure carried out by the Constitution Protection Office and its conclusion with a positive result, which includes an examination of the company, the examination of the persons affiliated with the company and an examination of the economic operator’s field of activity. The procedure itself is quite time-consuming, but the detailed rules and requirements regarding the special list of qualified market operators and the expectations for fund managers to be included in the list were only published in May 2024, just weeks before the official launch of the program. The combination of such circumstances has resulted in the fact that the preliminary qualification procedures initiated by the fund managers in front of the Constitution Protection Office wishing to participate in the program were not yet completed until the official launch of the program on 1 July 2024, and in fact, significant part of such procedures are still ongoing, resulting in that currently there is no operator on the market that meets the conditions set by the legislation and has obtained the required special qualification. As a result, there is no investment fund share, “product” on the market that meets the legal requirements and that the investors can buy for such purposes. In addition to the above qualification procedures, other significant obstacles to the program are regulatory uncertainties and open issues, mainly in the areas of capital markets and real estate law, which areas were already extremely complex even before the introduction of the Guest Investor Program. The legislator sets technical and compliance requirements for funds and fund managers at several levels, the interpretation and enforceability of which, however, under the current provisions, create considerable uncertainties and raise further questions for professionals. The clarification and specification of these circumstances is still a task for the legislator and an important prerequisite for the creation of a “product” for obtaining a residence permit, in accordance with the rules of the program, and thus for the effective launch of the program. In view of the above, it is reasonable to assume that further detailed rules on the scheme will be introduced.

While it is undisputed that, in principle, the possibility is already open for third country nationals to apply to the competent authority for the guest investor visa, it is important to reiterate and highlight that, based on the current wording of the legislation, the maximum period of validity of a guest investor visa is six months, but the applicant must declare that in which investment category he or she intends to invest within three months of the issuance of the guest investor visa. However, the current lack of a suitable “product”, carries the risk that the investor will objectively not be able to complete his investment within the committed timeframe and his visa will expire before the right conditions are in place.

Investment in residential property

According to the first draft and promulgated version of the new immigration act, the option of obtaining a guest investor residence permit through an investment in a residential property of at least €500,000 was open to potential investors from 1 July 2024, similar to the option for investment fund shares, but one of the amendments to the legislation changed the applicability of this alternative to 1 January 2025, with the additional condition that only the properties acquired after this date would be recognized and eligible for the scheme.

In addition to the rules on the validity of visas, which have already been described above, the spread of contradictory and often unsubstantiated information in the real estate market is causing third-country nationals wishing to invest to wait even longer.

The most important and controversial issue of the conflicting information circulating in the market is that whether the required residential real estate investment can be achieved by building up a portfolio of several smaller properties and adding up their value, which interpretation can not be supported by neither the current wording of the relevant legislation, nor the official forms prepared to initiate the procedure for applying for a guest investor visa and residence permit.

It is also crucial to underline that only the acquisition of an already built, finished residential property, registered as a separate property in the land register, with a separate topographical lot number, is eligible for the scheme, while project properties purchased off-plan or under construction do not, which significantly reduces the range of available and suitable properties, which may cause further difficulties for those planning to invest in this category.

In conclusion, given the fact that the capital markets focused option, which requires the investment of EUR 250,000, still requires a considerable amount of (regulatory) work to be done by the legislator and the authorities in charge of classifications, which are the preconditions for the creation of a suitable “product” by the market players, and the fact that the residential property investment option will only be available from 1 January 2025, the investors will have to wait a little longer, unless they wish to participate in the program by taking advantage of perhaps the least attractive investment option, i.e. by making a donation of EUR 1.000.000,-, for which, the way is clear.