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SUMMARY ON ACT LXXVI OF 2017 ON THE TRANSPARENCY OF THE ORGANIZATIONS SUPPORTED FROM ABROAD

The following summary shall facilitate the understanding of provisions of the new Act LXXVI of 2017.

The Hungarian Parliament adopted the Act LXXVI of 2017 on the Transparency of the organizations supported from abroad (hereinafter: Transparency Act). The communications of politicians regarding the Transparency Act and its prior acceptance have been one of the most debated action of the Hungarian governing party in the last years.

The definition of the Transparency Act names an organization as supported from abroad if it receives a support in the tax year in the value of HUF 7,200,000 (approximately EUR 24,000). This amount is set based on the 6 § (1) b) subsection of the Act LIII of 2017 on Money Laundering. The Transparency Act regulates that the notification obligation includes not only the support in cash but the non-financial contributions as well. According to the Transparency Act no reporting is required for funds from the European Union and for founds which are to be paid out through a Hungarian budgetary Authority.

The Transparency Act determines the circle of organizations are excluded under the notification obligation:

  • associations and foundations which are not regarded as civil organizations,
  • sport associations,
  • organizations carrying out religious activity,
  • national organizations and associations and such foundations of which articles of association stipulates the protect-, representation of their interest and foundations in connection with national and cultural autonomy.

The Transparency Act requires that a civil organization notifies within 15 days to the registry court that it has become an organization supported from abroad, if the value of the directly or indirectly received support reaches the HUF 7,200,000 in the year. If the value of the support from abroad reaches the amount of HUF 500,000, per supporter, then the exact source also has to be reported.

The detailed data must be provided about the supports and supporters with filing the yearly balance sheet to the registry court regarding the previous tax year also.

The court’s obligation is to forward the report to the ministry until the 15th day of each month. The ministry publishes the data on a special public website, it is called Civil Information Portal. If a civil organization is regarded as an “organization supported from abroad” it must be indicated on its website and in all published media products.

In case the civil organization fails to fulfil its obligations, the prosecutor shall send a letter for formal notice in which the prosecutor calls up the civil organization to comply with the regulations of the Transparency Act within 30 days. If despite the call up of the prosecutor, the organization continuously fails to fulfil in the letter for formal notice included obligation, the prosecutor calls up the organization again with a 15-day deadline. After elapsing this deadline again without result, the prosecutor initiates at the registry court to have a fine imposed on the civil organization, at the discretion of the court in amount from HUF 10,000 to HUF 900,000. This fine can be imposed on the founder of the organization or in case of more founders, it can be imposed on them jointly. The civil organization can apply for withdrawal of the mark “organization supported from abroad” in the same way as it has applied for the registration, if the value of the support in the year following the tax year does not reach the HUF 7,200,000, the organization has to report the modification to the court of registry within 30 days form the acceptance of its balance sheet. The court will report the ministry about the change in the status.

This act entered into force on 27th of June 2017.