The European Commission believes that a new law on foreign-funded NGOs adopted in Hungary last month breaks EU regulations, and has launched an infringement procedure.
The Commission has sent a letter of formal notice to Hungary for its new law, which was adopted on 13 June. The letter represents the first official request for information and is the first step in an infringement procedure. It gives the Hungarian authorities one month to respond.
The law in question states that certain categories of NGOs receiving annual foreign funding above HUF7.2 million (approx. € 24,000) must register and label themselves in all their publications, websites and press material as "organisations supported from abroad". These NGOs are also obliged to report specific information about the funding they receive from abroad to the Hungarian authorities with the threat of sanctions if they fail to comply.
Hungarian NGOs had already raised concerns over the new law ahead of its implementation, publishing an analysis of the act in its draft form that outlined a number of issues including the lack of a public consultation on the law, and the potential negative effects it would have on NGOs in the country.
The European Commission First Vice-President Timmermans also expressed serious concerns regarding the draft law's compatibility with EU law at the European Parliament Plenary debate on the situation in Hungary on 26 April.
The European Commission has concluded that the new act breaks EU law for the
• The law interferes unduly with fundamental rights as enshrined in the Charter of Fundamental Rights of the European Union, in particular the right to freedom of association. The new law could prevent NGOs from raising funds and would restrict their ability to carry out their work.
• The law also introduces unjustified and disproportionate restrictions to the free movement of capital, as outlined in the Treaty on the Functioning of the European Union. The new registration, reporting and publicity requirements foreseen by the law are discriminatory and create an administrative and reputational burden for these organisations. These measures may have a dissuasive effect on the funding from abroad and make it difficult for the concerned NGOs to receive it.
• The law also raises concerns as regards the respect of the right to protection of private life and of personal data. It does not strike a fair balance between transparency interests and the right of donors and beneficiaries to protect their personal data. This relates in particular to the requirement to provide the Hungarian authorities with the exact amounts of transactions and detailed information about donors, which are then made public by the authorities.
The Commission has therefore concluded that Hungary is failing to fulfil its obligations under the EU Treaties and the Charter of Fundamental Rights of the European Union.
“Civil society is the very fabric of our democratic societies and therefore should not be unduly restricted in its work. We have studied the new law on NGOs carefully and have come to the conclusion that it does not comply with EU law. We expect that the Hungarian government will engage in a dialogue to resolve this issue as soon as possible. We await a reaction from the Hungarian authorities within a month.”