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The most important, recent changes affecting the Accounting Act

News, Corporate law /

At the end of last year, Act LV of 2024 on amending certain tax laws was published, which, among other things, amends certain provisions of Act C of 2000 on Accounting (the “Accounting Act“). In our article, we summarise the most important changes of the Accounting Act.

Changes effective from 29 November 2024

  • Consequences of non-compliance with the audit requirement

If the company fails to comply with any publication or deposit obligation under the Accounting Act, including the auditing obligation, any third party (e.g. natural person, legal entity, public authority) may initiate a legal supervisory procedure before the Court of Registry.

  • New provisions relating to sustainability reporting

The Accounting Act states that companies who are required to prepare a sustainability report or a consolidated sustainability report, as well as persons who voluntarily undertake to do so, must appoint an auditor or audit firm that is a member of the Chamber of Auditors and has a sustainability qualification. The result is that only an auditor with a specific qualification can proceed in the case of a sustainability report. This circumstance shall be taken into account when engaging and appointing the auditor concerned. According to the transitional provisions, in the case of the sustainability report and consolidated sustainability report for the financial year 2024, instead of the company’s supreme body the management of the company will elect the auditor or audit firm that is a member of the Chamber of Auditors, no later than the balance sheet date.

 Changes effective from 1 January 2025

  • Increase in the threshold for statutory audit

As a general rule, all double-entry bookkeepers must be audited. However, there are exceptions to this obligation, subject to certain thresholds and number of employees. The Accounting Act has amended (doubled) the threshold amount, so that an audit is not required if, on average over the two financial years preceding the financial year

  • the company’s annual net turnover did not exceed HUF 600 million, and
  • the average number of employees of the company did not exceed 50.

If any of the above conditions are not met, the company is obliged to be audited.

The amended conditions apply for the first time to the accounts for the financial year starting in 2025.

  • Changes for the threshold for simplified annual accounts

Another general rule is that companies that keep double-entry accounts must prepare annual accounts and annual reports. However, there is indeed an exception to this rule, depending on the threshold and the number of employees. In view of the doubling of thresholds, a double-entry bookkeeper may now prepare simplified annual accounts if, for two consecutive financial years, any two of the following three values do not exceed the following thresholds at the balance sheet date:

  • the balance sheet total does not exceed HUF 2000 million,
  • the annual net turnover does not exceed HUF 4000 million,
  • the average number of employees in the financial year does not exceed 50 persons.

The general rule is that the new, increased thresholds apply to the accounts for the financial year starting in 2025, but the companies may choose to apply the higher thresholds for the financial year starting in 2024 .

In light of the entry into force and applicability of the above accounting rules, all concerned parties are encouraged to consider to what extent and in what way they affect their current and future operations and practices.

(Image Source: Tima Miroshnichenko, pexels.com)

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Key Provisions of the 2025 Labor Law Amendments

News, Employment, labour law / /

At the end of 2024, Act LVII of 2024 on labour-related provisions (“Amending Act“) was published, introducing new regulations for labour-related legislation for 2025. The Amending Act includes changes to the Act I of 2012 on the Labour Code (“Labour Code“) and the Act XCIII of 1993 on Labour Safety (“Labour Safety and Health Act “). In this article, we summarize the main provisions of the Amending Act.

  • Key provisions affecting the Labor Code:
  • The period to use paternity leave increases from 2 months to 4 months, considering its limiting nature. An important new provision is that employers shall not give notice to employees during paternity leave, even if they are executive employees.
  • Employees will be exempt from the requirement of availability and from work duty for up to two hours if their work obligations exceed eight hours on the day of an election or referendum. They will also be entitled to an absence fee for the duration of their absence. This amendment of the Labour Code aims to ensure employee participation in elections without financial or employment-related disadvantages.
  • The Labour Code already provided that the working time of an employee performing stand-by job or a relative of the employer, if they have a written agreement with the employer, may be increased to a maximum of 24 hours per day in the case of a daily working time schedule and to a maximum of 72 hours per week in the case of a weekly working time agreement. Given that this type of agreement can be very burdensome for the employee, the Labour Code provides the possibility for the employee concerned to terminate the agreement. In order to bring Hungary into compliance with EU law, the above-mentioned rules on the termination of a written agreement are being amended. According to the Amending Act, in the case of a work time frame exceeding 6 months, the employee may give 15 days’ notice to the last day of the calendar month after the expiry of 6 months.
  • The Amending Act, in the light of the interpretation of the law so far, specifically provides that employees are entitled to a 100% wage supplement for overtime work on public holidays.
  • Key provisions affecting the Labour Safety and Health Act:
  • According to the provisions of the Amending Act, documents generated in the context of occupational safety and health activities (e.g. documents on risk assessment or periodic safety review) must be kept by employers in an up-to-date condition at their headquarters or premises in such a way that they are accessible to the parties concerned, in particular employees. According to the reasoning, this is necessary because the Labour Safety and Health Act has not yet stipulated where occupational safety and health documents should be kept. In a number of cases, the occurrence of exceptional events has revealed that employers are not fully aware of their obligations, and employees and their representatives have not been able to get to know the provisions that are applicable to them. Both physical and electronic storage methods are acceptable.
  • In view of the increased amount of the OSH fines, the Amending Act introduces the possibility for employers to be allowed by the authority to pay in instalments, thus protecting smaller companies or, where appropriate, companies in financial difficulties. It is important to note, however, that if any instalment is not paid in time, the full amount of the remaining fine will be due.

The provisions of the Amendment Act take effect on January 1, 2025. Employers are advised to review their practices at the beginning of the year, particularly regarding the storage of occupational safety and health documents. This is crucial as the OSH authority’s scope includes ensuring compliance with all occupational safety regulations and enforcing them through administrative measures. The amendments to the Labor Code are equally important. For instance, should an employer terminate an employee during paternity leave and the termination is challenged in labour court, the court may rule the termination unlawful.

If you have any questions regarding the above, our Office is at your disposal.

(Image Source: Pavel Danilyuk, pexels.com)

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Rules on occupational safety and health in 2025

News, Employment, labour law / /

At the end of December 2024, a legislative amendment was published in the interests of legal competitiveness which also includes changes to the field of occupational safety and health. In this article, we summarise the new rules of Act XCIII of 1993 on Occupational Safety and Health (the “Occupational Safety and Health Act“) that will enter into force in 2025.

Simplification of the document preparation obligation

The employer is obliged to carry out risk assessment, risk management and the determination of preventive measures before the start of the activity and in justified cases. From 1 January 2025, the obligation to carry out periodic assessments under the Occupational Safety and Health Act has been extended to 5 years (compared to 3 years previously). These obligations now also apply if the employer’s scope of activity changes.

In addition, the legislation allows for the risk assessment to include a prevention strategy and the provision of personal protective equipment, so that these no longer need to be set out in a separate document.

Changes to the persons authorised to carry out tasks in the field of occupational safety and health

In many cases, the Occupational Safety and Health Act makes the performance of certain occupational health tasks by persons with professional qualifications subject to the approval of an occupational physician, but the legislator has considered that in certain cases it is appropriate to omit the medical approval and that persons with specific professional qualifications may perform certain occupational safety and health activities independently, thus making it easier for businesses.

Thus, from 1 July 2025, the occupational safety and health tasks required during the preliminary examination from an occupational safety and health point of view, the preparation of the occupational safety and health content of the rescue plan, the preparation of the occupational safety and health training agenda may be performed independently by a person with specialist medical degree in occupational medicine, occupational physician, occupational hygiene, public health epidemiology, preventive medicine and public health, or a person having qualification as a public health epidemiological inspector or supervisor. The tasks may continue to be carried out by a person qualified as a public health inspector or supervisor with the approval of an occupational physician.

The tasks relating to the occupational safety and health content of the risk assessment will also be carried out by persons with the qualifications listed above; this facilitation will also apply to employers with up to 50 employees classified the lowest, so-called class III risk category. This will also apply to the tasks related to the development of the occupational safety and health content of the prevention strategy from 1 July 2025.

For the same reasons, the scope of those entitled to carry out occupational safety and health tasks concerning the internal policy for the provision of personal protective equipment and the implementation of a working environment which does not pose a risk to health will also be amended from 1 July 2025. These tasks will be carried out by a medical doctor providing basic occupational health services or a person having qualification as a public health epidemiological inspector or supervisor. With medical approval, the tasks may continue to be performed by a person qualified as a public health inspector or supervisor.

Summary

The changes that came into force on 1 January and those that will be introduced later, on 1 July, will make it easier for businesses to comply with the safety and health requirements, both administratively and operationally.

If you have any questions about the practical application of the changes or compliance with any other occupational safety and health rule, our Office will be happy to help.

(Image Source: Luis Quintero, pexels.com)

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The Supreme Court took an important decision regarding the postal delivery of termination notices

News, Employment, labour law / /

According to the facts underlying the decision, the employee had moved from his registered address but failed to notify the employer of this change, despite being contractually obligated to do so. At the same time, the employee arranged for a so called “mail forwarding services” with the post office.

After the employee moved out, the employer sent a termination notice by post (to the previous address), which the employee has received as proved by the return receipt. Subsequently, during the communication related to the termination process of the employment relationship the employee indicated that the termination had not been delivered to him. However, the employer relying on the evidence of the return receipt dismissed the claim and proceeded with further steps, such as deregistering the employee.

For the reasons set out above, the employee filed a lawsuit against the employer, claiming unlawful termination of the employment relationship. During the legal proceedings, it was established that the postal worker had not acted in compliance with the delivery procedures when delivering the mail: despite the mail forwarding service, the termination notice was delivered to the employee’s former address, and the postal worker had failed to verify the identity of the person who received it.

The employer argued that the postal worker breached the forwarding agreement between the employee and the post office, but this breach should not affect the termination and could not be held against the employer.

However, the court did not accept this argument. Under the provisions of the Labour Code, in the event of a dispute, the burden of proof regarding proper delivery of a legal statement lies with the party making the statement—in this case, the employer. Since the employer was unable to demonstrate that the delivery was carried out properly (through no fault of its own), the Supreme Court declared the termination unlawful.

The decision highlights that, even if an employer acts lawfully when arranging the postal delivery of a termination notice, unforeseen circumstances outside the employer’s control may still result in adverse consequences, creating a potential risk for the employer. Therefore, before delivering any kind of an employer’s acts, it is advisable to consider alternative delivery methods and assess whether those might be preferable to postal delivery.

(Image source: sl wong, pexels.com)

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Key Information in connection with housing allowance

News, Employment, labour law / / ,

Introduction

Pursuant to Government Decree No. 403/2024 (XII. 18.) on housing allowance for employees (hereinafter the “Government Decree”), published in December last year, employers may provide housing allowance to their employees within a specified budget starting from January 1, 2025. This new type of non-wage benefit is also beneficial for employers, as it is subject only to a 15% personal income tax and an 18% social contribution tax. This article summarizes the main questions and considerations related to this allowance.

Key questions and advantages of the benefit

Housing allowance is available to employees under the age of 35, with a maximum annual amount of HUF 1.8 million, equivalent to a maximum of HUF 150,000 per month, provided the employee’s employment relationship lasts throughout the year.

The allowance can be used to pay off housing loans or rent. According to the Government Decree, employees can request the allowance by specifying their housing-related purpose. Employers are required to transfer the amount of the allowance to the bank account provided by the employee. Although the Government Decree does not explicitly state this, the Government communication suggests that in case of loan repayments, employers may transfer the allowance directly to the banks. Currently, the situation remains uncertain as it is unclear whether new regulations will be adopted or if banks themselves will establish additional conditions.

It is important to note that employees bear the primary responsibility for compliance with the legal requirements related to this benefit. If an employee receives housing allowance in an amount exceeding what they actually pay for rent or loan repayments, the tax authority will impose a penalty for the difference; additionally, the excess amount will need to be paid as personal income tax.

Summary

Although the legislator has already established some basic rules regarding the allowance, we strongly recommend to employers to consider the following during its implementation:

  • Establish internal policies outlining the conditions for providing the allowance, thereby minimizing tax and labour law risks and setting detailed rules in advance;
  • Prepare an appropriate statement for employees requesting the allowance which justify the purpose and type of the allowance, as well as the details of communication;
  • Identify the necessary documentation to be retained for verifying the allowance and ensure proper handling of this information from a data protection perspective.

Should you have any questions regarding the above mentioned, please do not hesitate to contact us.

(Image source: Timur Saglambilek, Pexels.com)

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New year’s changes related to TEÁOR codes

News, Corporate law / / ,

Introduction

Over the last two decades, the economy has undergone a major transformation, as a result of which the previous statistical classification of economic activities (“TEÁOR”) could no longer adequately reflect real business processes. In response to that, the European legislator has amended the NACE classification system, which means that from 1 January 2025, TEÁOR’08 – used since 2008 – will be replaced by TEÁOR’25. In our article, we have collected the most important information and obligations related to the change of TEÁOR.

The process of the conversion:

  • In case of the main activity

As of the first days of January 2025, the Hungarian Central Statistical Office (“KSH”) has converted the main activity codes of all economic entities according to TEÁOR’25, which will automatically change the statistical identifier of all companies. It must be stated that it is possible that the new main activity automatically defined by the KSH may not fully reflect the real business activity of the enterprise, as the scope of activity defined under the previous classification may have been split into several different new classification categories.

  • In case of other business activities

In the case of other business activities, the National Tax and Customs Administration of Hungary (“Tax Authority”) carries out the conversion. However, for these activities, the Tax Authority only performs its task if the codes are clearly conversable according to the official translation key (i.e. 1:1 correspondence between the old and the new TEÁOR system). Therefore, in cases where an activity code cannot be converted explicitly (i.e. the previous code is split into several parts), the Tax Authority does not modify the activities. In that case, if the entity concerned does not initiate the change to the new nomenclature by 30 June, the non-transferable activity will be deleted.

The KSH also informs businesses about the change of the main activity via the company gate, at the same time the codes of the translated main activities will be sent to the Tax Authority. The Tax Authority is obliged to forward the main activity codes it receives, and other activity codes converted by itself to the company registration authority by 31 January at the latest. Companies will therefore also be able to find out their activity codes according to TEÁOR’25 through the Companies Gazette and the services of the company information service available on the internet for a free of charge.

If the company concerned does not wish to accept the main activity code set by the KSH, or if the automatic conversion of other activities has not been carried out, it may request the NAV to amend the activities concerned or to record new activities by 30 June, using a form provided for that purpose. If a company does not initiate the change, that will be deemed to have accepted from 1 July. As a result, the main activity code will be the one provided by the KSH, whereas other business activity codes that cannot be expressly converted will be deleted by 31 August at the latest.

Tasks in connection with the articles of association

Given that only the company itself can amend its articles of association, the question may arise as to the timing at which companies need to implement changes related to the new TEÁOR codes.

Although the wording of the legislation and the information letters issued by the authorities raise a number of questions of interpretation, in our view, an enterprise that accepts the code automatically translated by the KSH for its main activity must amend its articles of association at the first other data change (affecting the articles of association and the register of companies itself) after 1 July. On the other hand, if the company concerned does not agree with the translated code, it must notify the new TEÁOR code identifying its main activity to the Tax Authority (by 1 July at the latest) on the basis of the new TEÁOR’25 code and at the same time arrange to notify the change in the data in its articles of association to the commercial court by amending its articles of association.

Companies are required to transfer changes to other activities and to initiate the corresponding change registration procedure when they make their first change to their data in the other companies register after 1 July.

An advantage in relation to the amendment of the instrument of incorporation is that the procedure at the Court of Registration is free of charge of fees and publication costs if the amendment of the instrument of incorporation is made solely to comply with TEÁOR’25.

Summary

It is clear from the above that the shift to TEÁOR’25 will affect all economic operators. To ensure that the changes take place in accordance with the real economic activity of the company, it is worth monitoring the process, and in the first weeks of February comparing the former and current status, so to ensure that the company’s list of activities is uptodate.

(Image source: Adem Podrez, Pexels.com)

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EU Blue Card minimum wage in 2025

News / / ,

 

The minimum wage that third-country professionals who work or will work in Hungary with an EU Blue Card can expect in 2025 has recently been published.

Why is this minimum wage important?

For this type of residence permit, the level of remuneration not only reflects professional standards, but is also an important criterion for the compliance of applicants and their employers. One important aspect of the minimum amount is that it avoids underpayment among those concerned, while it may also enhance the attractiveness of highly skilled positions.

In 2025, the minimum standard monthly wage will be HUF 883,671. And for specified health professions (general practitioner, pharmacist, specialised pharmacist, optometrist, dietician and nutritionist, physiotherapist, nurse, paramedic, nurse (tertiary level), midwife (tertiary level)) the minimum monthly wage is HUF 706,937.

What should employers look out for?

Employers concerned should check in good time that the wages of workers who are or will be employed with an EU Blue Card are in line with the new requirements.

If not, it is advisable to prepare for the change, which can go both ways:

  • adapt the related contracts to the new minimum wage requirements, or
  • if a pay rise is not possible, apply for other residence permit enabling continued employment.

If you have any questions about how to implement the changes in practice, or about the EU Blue Card in general, please contact our law firm.

Author: dr. Eszter Bohati, lawyer – CLVPartners

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Residing in Hungary as a managing director

News / / , , , ,

Introduction

In the next part of our series of articles, we will look at the residence of third-country nationals in Hungary as managing directors from several perspectives.

The issue may also be of particular importance because it is not at all unusual nowadays to appoint foreigners, often third-country nationals, to certain management positions in companies. In many cases, the appointment of such persons may not even include among the preliminary considerations the need to have a document proving their residence and the right to perform the activity.

In this article, we try to provide our readers with some food for thought information that can help in similar and not necessarily simple situations.

Before and after the Btátv.

There are also significant differences between the former (the Harmtv.) and the new legislation (i.e. the Btátv.) in this area.

Under the Harmtv., it was still possible to apply for a residence permit for the purpose of pursuit of gainful activity, which may sound familiar to many, if you wanted to work in Hungary as a managing director of a company, cooperative or other legal entity established for profit. However, in cases where the person appointed as a managing director did not wish to carry out their duties related to such a position or would have carried out not only such duties but (also) duties as a worker in the classical sense, they had to apply for a residence permit for the purpose of employment instead of for the purpose of pursuit of gainful activity.

The Btátv. provides for a much more colourful palette than this binary system when it comes to one or the other of the activities of executive officers in Hungary, which we will deal with below.

Executive officer or classic employee

Although the dual system for the performance of representative and employee functions, which existed under the Harmtv., was basically maintained under the Btátv., the current code allows for a choice between several types of licences within these two main categories, depending on the circumstances. The following shows how each type of licence builds on the others and the main subdivisions under which they may be used.

Name of the residence permit Performing the duties of an executive officer[1] Actual work outside the scope of the executive function
Guest self-employment Available from Not applicable
Guest investor[2] Available from Not applicable
Hungarian Card Not applicable Available from
Company Card Available from Available from
National Card Not applicable Available from

 Guest self-employment

As in all cases, in order to be approved by the authorities, the applicant must provide evidence of the circumstances relating to the residence permit and duly substantiating the application.

For this type of residence permit, the applicant must prove that:

  • the company has been legally employing at least five Hungarian nationals or persons with the right of free movement and residence on a full-time basis for at least six consecutive months, or
  • their presence in Hungary is essential for the operation of the company and their detailed declaration of economic activity attached to the application shows that they are likely to generate income for the company that will ensure its subsistence. In particular, they can substantiate their declaration by one of the following: a contract of engagement, a contract of commission, an agreement, a contract of sale or a contract of purchase.

It is important to note that in addition to the above, the immigration authorities may also ask for additional documents.

It may be a consideration that a person holding a residence permit for guest self-employment is subject to a regular registration obligation but may do so electronically through the immigration authority’s platform.

Hungarian Card

In contrast to the previous type, the Hungarian Card cannot be applied for the performance of managerial duties in Hungary, but only for actual work outside the scope of the executive function. For the latter only if the applicant has an appropriate higher professional qualification recognised by the authority, i.e. this type is subject to regulated qualifications.

In addition to proof of the applicant’s qualifications, the immigration authority may also request additional documentation to support the operation of the affected company, as detailed in the guest self-employment residence permit.

Company Card

This type is new to the residence rules. The purpose of its introduction – as its name suggests – is to make investment in Hungary as attractive as possible. Therefore, not only the applicant, but also the company applying for the residence permit must meet certain prerequisites. For example, the legal person may be an employer as defined in the Government Decree or an entity who has concluded a settlement contract with it.

National Card

You can apply for the National Card not only for general employment, but also for employment that goes beyond the duties of an executive officer, as we have examined.  However, it is important to note that it is only available to executive officers of a specific nationality.

Summary

It can be seen, therefore, that the scope of residence permits that can be applied for the two purposes outlined overlap or are mutually exclusive, but in principle provide full coverage for the different cases. This also means, however, that, unlike in the past, which was more familiar and simpler, greater care must be taken in choosing the right type of residence permit, so that it serves the real interests of the applicant, taking into account all the other circumstances not yet discussed in this article as well.

Author: dr. Eszter Bohati, lawyer – CLVPartners

[1] Acting as a director of a company, cooperative or other legal person – for profit

[2] We will not go into this category in detail, we will just mention it.

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Residence permit for employment purposes

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Introduction

Perhaps no one will think it is an exaggeration to say that the “general” residence permit for work purposes under the Harmtv. and the same under the Btátv. are the most applied for by foreigners when it comes to working in Hungary. This is true even though a number of permits for other purposes have been added to the range of employment-related possibilities over time.

In view of the practical importance of this type of permit, this article will look at the rights and obligations attached to the said permit under the Btátv., in comparison with its predecessor under the Harmtv., to help you understand what has changed or remained the same.

What remains the same

What will surely be familiar to anyone who has at least once dealt with such a residence permit application is the underlying prerequisite: the employment objective. Such a permit is primarily available to those who wish to spend a longer period in Hungary in order to carry out actual work for or under the direction of another person, for consideration, on the basis of an employment relationship. The Btátv. has not changed this, so the contractual relationship for this purpose must still be proven when applying (e.g. most often by a preliminary agreement with the future employer).

It may seem novel, but it is not really, that the Government can define occupations in which employment is prohibited. A similar protectionist provision has been part of the terms and conditions of employment of third-country nationals in the country for almost 30 years, although it was not so ‘in the spotlight’ before.

The same is true for the limitation of the number of foreigners employed in Hungary, as it has been a relatively long-standing option to maximize the number of residence permits that can be issued. The magic number for 2024 is 65,000, i.e. this is the maximum number of residence permits for employment purposes and guest worker residence permits that can be issued under the single application procedure this year.

What has changed

Guest worker instead of employment purposes

The Btátv. has completely overhauled the regulatory system. Among the redefinitions, the category of guest worker was born. This generic term, however, refers to a group, as it covers and encompasses not one but four types of residence permit. These are: seasonal guest worker, guest worker employed for the purpose of carrying out a project, residence permit for employment purposes and guest worker residence permit. The old-new type therefore falls into this category.

Why do you want to come?

Another noteworthy difference is the other purpose for which the authorisation is granted.

In the past, an employed person could also redeem this residence permit if, as an owner or executive officer of a company, cooperative or other legal person established for gainful purposes, actually intended to carry out work outside the scope of this activity. However, since under the Harmtv. a managing director could only work in Hungary under one legal title (i.e. one residence permit), the one for employment purposes emerged as the winner in the “competition” between two types of permits – which would otherwise be applicable to him/her – and it was worth obtaining it. In comparison, the Btátv. now places residence and activity in Hungary for such purposes under a completely different immigration category.

The rule that a residence permit for employment purposes can be obtained even if the employment relationship is not with the Hungarian employer, but the foreign worker is only on secondment in the Hungarian company is new.

What about the duration?

The maximum period of validity remains two years. Under the Btátv., however, the related provisions are also slightly different. In contrast to the previous application procedure, where employees could in practice have their residence permit extended as often as their (work) contract with their employer was extended, the possibility of continuous extension without limitation has been abolished under the new system. After three years from the date of the first issue, the worker concerned must apply for a new residence permit instead of an extension.

Who else can come?

Under the Harmtv., a family member of a foreign national holding or applying for a residence permit for employment purposes could apply for approval of residence in Hungary for the purpose of family reunification on the basis of the residence permit of the former. This meant that the person with a relatively close family relationship could, if the other conditions of the application were met, live here with their working relative even without an employment relationship.

As part of the conceptual revision of the Btátv., this possibility was not left untouched. Residence for the purpose of family reunification may still be granted to a very limited number of persons who previously held such a permit, but the new code has removed this possibility for family members of holders of the new type of work permit.  This may, in practical terms, lead to a significant change in the willingness to work, given the competition for certain guest workers with close family ties. However, no concrete negative effects that can be translated into figures can be reported at this stage.

Leaving the country as an employer’s obligation

There was probably no doubt in anyone’s mind before that a temporary worker could only remain in the country after the end of their temporary employment if there was a valid reason and an accompanying authorisation. If there was none, they had to leave. Violation of this obligation was also sanctioned by the Harmtv.

However, the Btátv. has also taken this to a new level, and to make the employer feel the weight of responsibility (even more), a new type of fine has been introduced, with a clearly visible amount. In this way, companies have an even greater interest in ensuring that all their foreign workers are, if not sent home, then at least sent outside the country within a short period of time. There is currently no well-developed official practice on how companies can best meet these obligations in a way that protects them, but if you are interested in our advice and suggestions in this regard, please contact us.

Summary

It is important to note that this summary is intended to provide a comprehensive overview of the overlaps and differences between the referred residence permits, but not all relevant parts have been covered and, due to its nature and general purpose, this article does not constitute legal advice. If you have any questions, either about the above, or about background not covered here, or if you just want a more comprehensive summary, we encourage you to contact us.

Author: dr. Eszter Bohati, lawyer – CLVPartners

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The new era started on 1 January 2024 – Btátv.

News / / ,

Introduction

Many of you will have read in many places about the new immigration code that arrived almost in tandem with 2024. With this series of articles, we will try to cover the relevant topics and changes not only in general terms, but also by answering more specific questions that may affect clients in general, as practitioners. With this aim in mind, the topics covered will essentially cover employment issues.

However, in order to put the changes and knowledge into context and to assist later interpretation, the first part of our initiative presents a summary of the changes to the legislation referred to.

Old and new

Perhaps the most noteworthy change between the former (i.e. the Harmtv.) and the new legislation (i.e. the Btátv.) is that the legislator has moved from a more general to a more categorical and in many respects more restrictive form of regulation. To be specific, residence in Hungary for employment purposes is covered by several types of permits that did not exist before or were regulated differently from the previous ones, but there are also permits that have been created to unify the ‘scattered’ provisions (see the National Card). The mechanisms practised under the Harmtv. are therefore not applicable under the Btátv. or only with significant differences.

In addition, the Btátv. also sets out protectionist objectives. For example, it has been declared that the new law aims to tighten “the legal titles and conditions of residence and employment of foreign nationals in Hungary“, to give preference to the employment of Hungarian workers over foreigners and to create a barrier against mass immigration.

It is important to note, however, that the new Code and its implementing regulation do not mean that the previous rules no longer need to be applied, or in certain cases may not apply. In fact, there are certain purposes of residence and situations in which the Harmtv. continues to apply, and it is necessary to be aware of it. Such a ‘surviving’ provision applies, for example, to residence permits to ensure family reunification, which (still) may be issued under the previous rules, and which may be of particular importance for certain groups of workers, even if (only) in terms of motivating and retaining employees.

Third-country national vs. person with the right of free movement and residence

The legislative background of course maintains the distinction between third-country nationals and persons having the right of free movement and residence (mainly EEA nationals and their family members). In this respect, it is suggested to keep in mind the practical aspect that in the case of a third-country national whom the employer knows will “join” or arrive with an EEA national entitled to a longer stay, the employer should check in advance whether such family member is covered by the Act on Admission and Residence of Persons with the Right of Free Movement and Residence and thus effectively exempted from the Btátv.

Categories by length of stay

The Btátv. basically distinguishes between three categories depending on how long the third-country national wishes to stay in Hungary, so the type of permit required can be decided on the basis of this period:

  1. short: i.e. any stay of no more than ninety days in any one hundred and eighty days is planned by the third-country national. This requires – for entry purposes – “only” a visa, or even none for certain nationals.
  2. permanent: this category includes planned stays in Hungary of more than ninety days in any one hundred and eighty days. Stays of this duration are subject to authorisation, i.e. the person concerned must apply to the immigration authority for a permit adapted to the purpose of his/her stay, which is in fact pre-selected on the basis of the purpose of the stay.
  3. long-term: this is a group of residence permits and cases for indefinite term, and of course subject to additional conditions compared to the previous categories.

The second, and most commonly used, category and duration of the authorisation is always purpose-bound. For this reason, it is very important that the employer and the person concerned consult an application specialist beforehand on the type of permit that is actually suitable for the purpose, as an incorrect application can lead to a significant delay in the establishment of the employment relationship.

As an illustration, a very simplified rule of thumb, but at least reminiscent of a preliminary assessment of the conditions for authorisation, has been modelled on the known principle. This means that all third-country nationals are covered by the Btátv., but not all persons covered by the Btátv. need a permit from the labour authority (either separately or combined with their residence) to work (as mentioned in the previous point, there are of course exceptions in the direction that the third-country national is not covered by the Btátv., but in practice these are the rarest.)

Summary

In general terms, the new legal regime allows some people to work in Hungary under stricter rules, while others – if the conditions are met – can benefit significantly. In order to comply with the stricter requirements and to benefit from such potential “advantages”, it is recommended that all concerned seek prior advice on this issue. Should any questions arise in this respect, our office is of course at your disposal to help you untie any knots.

Author: dr. Eszter Bohati, lawyer – CLVPartners

The new era started on 1 January 2024 – Btátv. Read More »

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