Hungary - Hungarian Foreign Investment restrictions - UPDATE




As we reported in May  new foreign investment restrictions were introduced by a Government Decree during the Covid 19 state of emergency. At that time the restrictions appeared extensive and burdensome for foreign investors. With effect from 18 June 2020, the Hungarian Government terminated the Covid 19 state of emergency declared on 11 March and several Government Decrees issued in the past few months ceased to have effect. However the Parliament adopted an Act which contains certain provisions from those Decrees (and certain refinements of those provisions) which will therefore remain effective – most of them until the end of 2020. In this Newsletter we focus on provisions of this Act on foreign investment restrictions and certain practical issues which arise from their implementation.

The regime introduced by the Government Decree and to a large extent maintained by the Act, with some notable exceptions, is not unique and unprecedented in the EU and several other Member States have also adopted similar regulations and from October 2020 the EU FDI Regulation will come into force. Nevertheless, the Hungarian regulation has its own local flavour and many foreign investors in Hungary need to take account of these new rules in relation to any planned transaction.

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