Why Hungary

Norway Grants: Hungary Secures HUF 92 Billion in Funding – status: Governmental announcement

Hungary has concluded its negotiations on the 2021–2028 EEA and Norway Grants framework. Under the agreement, Hungary will receive EUR 254.1 million (approximately HUF 92 billion), with the cooperation agreement expected to be signed in the near future. This will create a significant source of development financing of the civil sector.

The agreement marks the end of a prolonged impasse that had prevented Hungary from accessing funding during the previous grants period. The dispute primarily concerned the governance of the EEA and Norway Grants' civil society funding mechanisms, in particular the independence of the Civil Society Fund and the allocation of grants to non-governmental organisations. As no compromise could be reached on these issues during the previous cycle, Hungary did not participate in that funding period.

End of rule-of-law conditionality procedure – status: Governmental announcement

The Council of the European Union has closed the rule-of-law conditionality procedure against Hungary, removing one of the main barriers to the country’s access to certain EU funding programmes since 2022. The Council concluded that Hungary had implemented a range of reforms addressing concerns relating to public procurement, anti-corruption measures, conflicts of interest and institutional oversight.

A key consequence of the decision is the restoration of full access for Hungarian universities to the Erasmus+ student mobility programme and the Horizon Europe research framework. These restrictions had prevented Hungarian institutions from participating in new Erasmus+ opportunities and substantially limited their involvement in EU-funded research projects. Further, the decision paves the way for the release of an amount EUR 4.2 billion from EU cohesion fund, previously suspended.

New wealth tax – status: Proposal open for public debate

A new draft bill proposes the introduction of an annual wealth tax on individuals and certain asset-holding structures, including trusts and private foundations. Under the proposal, net wealth exceeding HUF 1 billion (approximately EUR 2.7 million) would be subject to a 1% tax, while the portion exceeding HUF 100 billion (approximately EUR 270 million) would be taxed at 1.5%.

The proposed tax would apply to a broad range of assets, including real estate, shareholdings, financial investments and other valuable assets. The taxable base would be determined under statutory valuation rules, taking into account certain deductible liabilities. In the case of unlisted company shares, the valuation would be based on a combination of the company’s equity and profitability, which may result in a taxable value significantly different from acquisition cost or book value.

The proposal may also affect individuals who are not Hungarian tax residents. Non-residents holding shares in Hungarian companies or owning Hungarian real estate, whether directly or through certain property-holding companies, could become subject to Hungarian wealth tax. Depending on the applicable double taxation treaty, Hungary’s taxing rights may be restricted, particularly in relation to company shareholdings. Such treaty protection would generally not extend to Hungarian real estate, which typically remains taxable in the country where the property is located.

The draft legislation is currently subject to public consultation and may still be amended before adoption. Under the current proposal, the first assessment would be based on assets held on 31 December 2026, with the first filing and payment deadline falling on 31 August 2027. Taxpayers would be required to calculate, declare and pay the tax on a self-assessment basis.

Comprehensive review of Hungary’s waste management concession – status: Government review launched

It has been announced that the Government will review Hungary’s waste management system and the 35-year concession operated by MOHU, a subsidiary of MOL Nyrt., Hungary’s largest oil and gas company. MOHU has operated Hungary’s waste management concession since July 2023, including municipal waste services, the deposit return system, and key functions under the extended producer responsibility (EPR) regime. The assessment will examine the fulfilment of contractual commitments, investments, system efficiency, progress towards waste management and recycling targets, and the transparency of the current model. Based on the findings, the Government may consider contractual, regulatory, or institutional changes.

Stronger environmental safeguards proposed for priority investments – status: Legislative proposal submitted

A draft bill proposes stricter environmental and nature conservation safeguards for construction projects designated as priority investments. Under the proposal, construction permitting procedures could be suspended if environmental or nature conservation infringement proceedings are initiated, and further permits could be withheld until any infringement has been remedied. The proposed rules are intended to strengthen environmental compliance and clarify the interaction between environmental and construction permitting procedures. The measure forms part of a broader review of Hungary’s priority investment regime.

Hungary completes key milestones for EU recovery funding – status: Official announcement

Hungary has completed the milestones and reforms required under its Recovery and Resilience Plan by the 31 August 2026 deadline. Among the final measures adopted were energy-related decrees implementing RRF commitments, including reforms relating to renewable energy development, energy storage, smart metering, permitting procedures, grid capacity allocation, and wind power investments. The announcement does not constitute a final decision on the disbursement of EU funds. The European Commission must assess whether the relevant milestones and targets have been fulfilled before payments can be made.

Leadership appointed for Hungary’s new National Asset Recovery and Protection Office – status: Key officials appointed

The Hungarian Parliament has elected Anna Unger as President of the newly established National Asset Recovery and Protection Office (NVVH) and appointed one of its Deputy Presidents for Investigations, with their six-year mandates commencing on 1 September 2026. The NVVH is an independent institution responsible for investigating the unlawful management of public assets and pursuing related criminal and civil-law claims. According to public statements, the first investigations may begin in 2026, while the Office’s asset protection risk assessment methodology is expected to be completed by the end of the year.

Wind power grid capacity tender published – status: Final tender documentation published

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) published the final tender for the allocation of grid capacity for new wind power projects in Hungary. Applications may be submitted between 4 September and 30 October 2026. The tender covers nine grid nodes across six districts, with a total available feed-in capacity of 702 MVA. The earliest grid connection date is 30 September 2030, while project-specific connection dates may not be later than 30 September 2032. MEKH expects to publish the results by 13 December 2026. The tender documentation is avaiable here.

EUR 3 Billion Housing Construction Programme Announced – status: Government programme announced

The Hungarian government has announced the Wekerle Sándor Housing Construction Programme, under which EUR 550 million in EU funding will be allocated to the development of new residential housing and student accommodation. The programme is expected to attract additional financing from private investors and the European Investment Bank, potentially increasing total investment to EUR 3 billion.

Separately, the government is reviewing the priority status previously granted to major development projects and has already proposed to withdraw such status from several investments. Certain state-supported housing developments are also being reassessed.

Review of the contracts of 4iG, the Hungarian telecom giant

The Hungarian government has ordered a review of state-related contracts, financial arrangements and ownership links involving 4iG Nyrt., the Hungarian telecom giant. The review coincided with the postponement of the signing of a planned term-sheet with the U.S. International Development Finance Corporation (DFC), although no official connection between the two developments has been confirmed. The announcement triggered a sharp decline in 4iG’s share price.

At the same time, the group continues to pursue its expansion strategy, including the launch of a new energy division and further regional investments.

Further reduction of the central bank base rate – status: Central Bank decree in force

The Monetary Council of the National Bank of Hungary (MNB) reduced the base rate from 5,75% to 5.5% in line with market expectations. The base rate has now been reduced by a total of 1 percentage points over the past three months.

Energy Reform Package Released – status: Public Consultation

The Ministry of Economy and Energy has released a package of energy-sector amendments for public consultation. The proposals are intended to support the implementation of Hungary’s Recovery and Resilience Plan and facilitate access to EU funding tied to energy-sector reforms.

The draft legislation would introduce changes across multiple areas of the energy market, including renewable energy development, grid regulation and permitting procedures. Among other measures, the proposal would significantly expand the number of “preferred areas” eligible for simplified wind power development and introduce accelerated permitting timelines for renewable energy projects in such locations. The package also seeks to streamline grid connection procedures, update the regulatory framework for energy storage and energy communities, and further integrate distributed energy resources into Hungary’s electricity system.

The proposals reflect a broader effort to modernize the regulatory framework and remove barriers to the deployment of new energy infrastructure. The proposals can be found at the following links: Proposal 1Proposal 2

András Baka elected President of the Republic – status: Parliamentary Decision Adopted

The Hungarian Parliament has elected András Baka as President of the Republic. His term will commence on 19 August 2026. Baka previously served as President of Hungary’s Supreme Court and as a judge of the European Court of Human Rights. His mandate as Supreme Court President was terminated before the end of its term in 2012 following his public criticism of judicial reforms. His election is widely expected to be of a transitional nature, as it has been indicated that, following a planned constitutional reform, future Presidents may be elected directly by voters rather than by Parliament.

Under Hungary’s Constitution, the President of the Republic’s role is largely ceremonial. Key powers include signing legislation, initiating constitutional review of laws, and making certain appointments, while executive authority rests with the Government.

Hungary launches HUF 51 billion water network development programme – status: Government Programme Announced

The Hungarian government has announced a HUF 51 billion (approximately EUR 140 million) programme to modernise drinking water infrastructure and reduce network losses caused by ageing systems. Funding will be available to municipalities, water utilities and other operators for network reconstruction and the deployment of technologies such as remote meter reading, automated system operation and pressure management. A significant portion of the programme is intended to support disadvantaged regions.

Recent data highlight diverging trends in the Hungarian economy

Hungary’s fiscal position continued to improve in July, with the budget posting a HUF 524.3 billion surplus. While the cumulative deficit remains significant, recent months have seen a marked turnaround, helping to bring the year-to-date shortfall down to 67.7% of the annual target. Investor sentiment also remained strong. The BUX (the benchmark index of the Budapest Stock Exchange) index closed above 150,000 points for the first time in its history, supported by robust performance from Hungary’s largest listed companies and continuing growth in the domestic capital market.

Meanwhile, according to data published by the Hungarian Central Statistical Office (KSH), construction output fell by 5% year-on-year on a calendar-adjusted basis in June and was down 3.9% compared to the previous month. This was the second consecutive month of declining output, although monthly performance in the sector has remained volatile, with particularly weak figures in January and a strong rebound recorded in April.

Energy authority launches consultation on wind power capacity tender – status: Industry consultation launched

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) has launched an industry consultation on the draft tender documentation for the allocation of grid capacity for new wind power projects and the expansion of existing wind power plants. Following a recent industrial survey assessing planned wind energy investments, MEKH has begun preparing the tender documentation for the capacity allocation procedure, which is expected to be launched by the end of August. MEKH accepts comments on the documentation until 5 August. The consultation paper is accessible here: https://www.mekh.hu/kapacitas-palyazati-eljaras

Capital injection into the Hungarian Development Bank by EU – status: European Commission approval granted

The European Commission approved a EUR 2 billion capital increase in the Hungarian Development Bank (MFB), financed from Hungary’s Recovery and Resilience Facility (RRF) funds. Out of the funds, MFB will develop programmes focusing on SME lending, SME equity financing, and housing market initiatives, including support for low-income households and affordable student accommodation. The capital increase must be completed by 31 August 2026.

OTP the largest Hungarian credit institution announces its largest acquisition to date – status: Acquisition agreement signed

OTP has signed an agreement to acquire Luminor, the third-largest banking group in the Baltic region. The transaction is the largest acquisition in the Hungarian OTP Group’s history and marks its entry into the Baltic banking market, expanding the Group’s presence to 14 countries.

Reduction of the central bank base rate – status: Central Bank decree in force

The Monetary Council of the National Bank of Hungary (MNB) reduced the central bank base rate from 6.00% to 5.75%. MNB plans further rate cuts later this year, depending on the findings of its September inflation report.

Electricity grid capacity tender rules published for consultation – status: Public Consultation

A draft bill on the allocation of available capacity on Hungary’s medium- and high-voltage electricity grids has been released for public consultation. The proposal would govern the tender process for new grid connection capacity and is intended to facilitate the integration of additional renewable generation capacity into the electricity system.

While the original plan envisaged the allocation of 700 MW of capacity for new wind power projects, it is now announced that the upcoming tender is expected to allocate nearly 1,000 MW in response to stronger-than-anticipated market demand. Under the draft legislation, the tender notice would have to be published by 31 August 2026, and successful bidders would have 24 months to initiate their grid connection.

Changes to trust taxation and corporate income tax rules – status: Legislative proposal submitted

A draft tax bill has been submitted that would substantially amend the taxation of Hungarian trusts by eliminating a significant tax advantage available under the current regime. The proposal would introduce a system more closely aligned with the taxation of inherited assets, while retaining certain exemptions. It would also expand reporting obligations and introduce mandatory tax authority audits.

The proposal would further abolish several corporate income tax base reduction items and amend or phase out certain minor taxes, including taxes previously found incompatible with EU law by the Court of Justice of the European Union. In addition, it would double the air emission fee rate, reflecting the increasing focus on environment protection.

Further, a broader review of the corporate income tax system is also planned. The review is expected to focus on large companies and may lead to a broader tax base and more limited tax incentives, rather than an increase in Hungary’s current 9% corporate income tax rate.

Hungary to join EU satellite and artificial intelligence programmes – status: Ministerial announcement

Hungary plans to join the EU’s IRIS² satellite programme and the AI Gigafactory programme.

Under IRIS², Hungary is expected to gain access to a secure European satellite communications network comprising approximately 300 satellites, including 17 allocated to Hungary. The network is scheduled to become operational by 2030. The programme is intended to reduce reliance on private satellite providers and support developments in cybersecurity, defence, agriculture, research and development, and the domestic space industry.

Hungary has also joined a Polish-led consortium under the EU’s AI Gigafactory programme. Related investments of EUR 500 million are planned. The stated objective is to strengthen Hungary’s artificial intelligence capabilities and reduce the country’s regional technology gap in a field expected to have a broad economic impact.

European Commission calls for further rule-of-law reforms in Hungary – status: Published recommendations

The European Commission’s 2026 Rule of Law Report acknowledges reforms introduced by the new Hungarian Government in areas including judicial governance, anti-corruption safeguards, media regulation and civil society. However, the Commission considers that the practical impact of several measures cannot yet be assessed and recommends further action regarding court case allocation, judicial remuneration, lobbying rules, high-level corruption cases and the legal framework for civil organisations. Following the European Commission’s assessment, further measures are expected to strengthen compliance with rule-of-law standards and consolidate the progress achieved to date.

Hungary joins EU Energy Storage Initiative – status: Tripartite agreement signed

Hungary has joined the EU’s Energy Storage Initiative, a new EU-level agreement between member states, public and private sector stakeholders, aiming at energy storage capacity development across Europe. As a new member, Hungary has committed itself to adding 700 MW of new storage capacity by 2028, supporting the integration of renewable energy, improving grid flexibility, and strengthening security of supply.

Legislation proposal concerning wind turbines - status: Public consultation

A public consultation has been launched on the proposed legislation for the establishment of wind turbines and the corresponding permit procedure. The proposal would ease the localization requirement of wind turbines and increase the maximum permitted height of wind turbines to 199 metres instead of the current maximum of 130 metres.

Government intends to uphold price margin caps – status: Ministerial communication

It has been indicated that the government does not intend to phase out the “price margin cap”, despite calls from market participants for the measure to be lifted. The price margin cap, introduced as a temporary measure in early 2025, limits retailers’ margins on selected food and drugstore products. It currently applies to 43 food products and 30 drugstore product categories.

New wind power capacity tender – status: Ministerial announcement

The Minister for Economy and Energy announced that a tender for new wind power generation capacity will be launched on 31 August 2026, enabling the connection of at least 700 MW of new wind power capacity to the electricity grid. According to the announcement, the first phase is expected to generate approximately EUR 1 billion of investment in Hungary. A draft of the tender documentation is expected to be released for public consultation in mid-July 2026. The announcement also states that the Government's broader objective is to increase Hungary's installed wind power capacity to approximately 4 GW by 2030, representing a tenfold increase compared to the current installed capacity.

Reduction of the central bank base rate – status: Central Bank decree in force

The Monetary Council of the National Bank of Hungary (MNB) reduced the central bank base rate from 6.25% to 6.00%. MNB also indicated that further interest rate cuts may be implemented during the summer, supported by lower inflation and improving macroeconomic conditions.

Amendment to the Hungarian Constitution – status: Public Consultation

Following the adoption of the previous amendment, the proposal for a new amendment of the constitution has now been released for public consultation. This new proposal introduces several significant restrictions affecting constitutional offices. Among the key changes are a 12-year limit on the terms of MPs and the establishment of a maximum age of 70 for constitutional judges. A special provision of the amendment also aims at removing the current president of the Republic.

National Asset Recovery and Protection Office to be established – status: ­Public consultation

A new draft bill proposes the establishment of the National Asset Recovery and Protection Office, an independent public authority responsible for safeguarding public assets. A special aim of the Office is to recover such State assets that have been unlawfully alienated in the past 20 years. The Office would have broad competence to review matters involving public procurements, subsidies, concessions, state- and municipal assets, state-owned or publicly funded entities and EU-funded projects. It would be empowered to conduct risk assessments and public-asset protection reviews, request documents and data, carry out on-site inspections, require cooperation from public and private actors, and initiate administrative, civil or criminal proceedings or other competent authority procedures where appropriate.

Review of tobacco regulatory framework – status: Published governmental measure

A government resolution was adopted, ordering the review of tobacco-concession contracts and the regulatory framework of concession tenders, with a deadline of 1 August. The current tobacco concession system was established in 2013. Under this system, the retail sale of tobacco products falls under the exclusive competence of the State, with sales limited to licensed “National Tobacco Shops” operating under fixed-term concession contracts in a closed and centrally supervised supply chain.

Review of gambling regulatory framework – status: Published governmental measure

In parallel with the review of the tobacco regulatory framework, another government resolution ordered the review of casino-concession contracts and the regulatory framework of concession tenders, with a deadline of 15 August. Hungary’s casino market is built around a tightly controlled concession and licensing model, where casino operators need state-granted rights and authorisation from the Supervisory Authority for Regulatory Affairs. Under this model, both land-based and online gambling activities are subject to this licensing requirement and additional sector-specific regulatory oversight, which has restricted the opportunity to enter the market to a small number of concession holders.

Foreign cryptocurrency exchange service providers may return to Hungary  – status: Public consultation

The previous legislation required companies providing cryptocurrency exchange services to obtain approval from a designated “validator” firm, being a single, state-approved company having a monopoly in this field. Violations of this validation requirement constituted a criminal offence. This led to the exit of numerous foreign cryptocurrency service providers. The proposed changes seek to abolish this validation obligation and remove the related criminalization, paving the way for cryptocurrency service providers to return to the Hungarian capital market.

Our article on the topic: Regulatory barriers for foreign crypto service providers may soon disappear in Hungary

Revision of NIS2 audit requirements – status: Governmental decree in force

Up to now, cybersecurity regulations allowed only a select few firms to conduct high-level NIS2 audits. The new regulatory changes broaden the scope of the auditors qualified to participate. This expansion not only opens the market but also enables NIS2-affected companies to arrange their mandatory audits with greater transparency and efficiency, ultimately reducing costs and improving accessibility.

Wealth tax – status: Bill under preparation

The government is moving ahead with the announced wealth tax of 1% on wealth exceeding HUF 1 billion (EUR 2.85 million), which is expected to generate a tax revenue of HUF 300 to 600 billion (EUR 850 million to EUR 1.7 billion). The legislation is expected to be adopted by the end of October 2026, and the collection of the tax will start in 2027. Key aspects of the regime are expected to adopt the Swiss wealth tax framework as a point of reference.

Phase-out of interest rate cap on mortgage loans – status: Launched on public and professional consultation

Since September 2025, the interest rates banks can apply to certain mortgage loans are capped. It is now suggested that such ceiling on interest be gradually phased out, which may restore market-based pricing within the affected loan portfolio.

Noteholders of private equity funds become transparent – status: Legislative proposal submitted

A legislative proposal intends to increase the transparency of the beneficial owners of private equity funds. Accordingly, individuals holding, directly or indirectly, at least 25% ownership interest or voting rights, or otherwise exercising effective control, would qualify as beneficial owners and need to be registered in the UBO register. The amendments may also result in enhanced disclosure obligations for private equity funds and their managers.

Suspension of guest worker admissions – status: Governmental decree in force

The guest worker residence permit scheme allowing the mass employment of workers hired from third countries has been closed with immediate effect. The reasons for the closure are to limit the large-scale influx of guest workers and to encourage the employment of Hungarian workers. Independently from this measure, employment-purpose residence permits remain still available for foreign workers under the generally applicable rules.

Review of private equity fund rules – status: Published governmental measure

It is proposed to review the existing system and legal framework governing private equity funds, with particular emphasis on the transparency of beneficial ownership structures. The Minister of Finance has been tasked with preparing the draft legislative framework by 15 June 2026.

Utilization of EU funds concerning electricity capacity – source: Press release

Out of the EU funds to be retrieved by Hungary by the end of August, EUR 1.5 billion will be directed towards electricity grid modernization, network expansion and new grid connections. These investments are expected to alleviate existing capacity constraints, accelerate the integration of renewable energy projects, and create a more attractive environment for renewable energy developments.

Unchanged credit rating of Hungary

The three major credit rating agencies have completed the first round of their annual sovereign rating reviews. In the case of Hungary, all ratings remained unchanged. Following the agencies’ confirmation of their previous ratings and outlooks in recent weeks, the next comprehensive assessment of the Hungarian economy is expected at the end of the year.

End of emergency legislation – status: Act of law

At the outbreak of the Russian-Ukrainian war, emergency legislation was introduced granting the Hungarian Government expanded legislative power which was exercised through governmental decrees. Abolishing the opportunity, the state of emergency which had been in place since 2022, came to an end on 14 May 2026.

Amendment to the Hungarian Constitution – status: Parliamentary proposal

A proposal to the Hungarian Parliament was submitted to amend the Hungarian Constitution. According to the proposal, the amendment would limit the term of office of the Hungarian Prime Minister to a maximum of two terms (eight years), abolish the Sovereignty Protection Office, and enable the state to reacquire certain assets transferred to public-interest asset management foundations.

Release of EU funds – status: Press release

An agreement has been reached between Hungary and the European Union concerning the release of EU Funds towards Hungary in the amount of EUR 16.4 billion. The parties have agreed on the specific milestones and conditions for disbursement. The EU funds can be utilized in the following key investment areas: the development of transport infrastructure, healthcare services, social infrastructure, and environmental projects.

Introduction of wealth tax and reassessment of tax exemptions applicable to trusts – status: Published governmental measure

In accordance with the promise undertaken by the new ruling political party a wealth tax will be introduced in Hungary. Further the tax exemptions currently applicable to trusts will be reviewed. The Minister of Finance has been tasked with the preparation of the framework of the relevant legislation by 5 June 2026.

Review of enforcement, notarial and company winding-up proceedings – status: Published governmental measure

It is proposed to review the existing judicial enforcement, notaries, and liquidation/insolvency proceedings. The objective of the reform of these systems is to make the procedures more cost-effective, efficient, and less profit-oriented.