Dr György Zalavári LL.M

A foreign legal or natural person may acquire ownership of real estate other than agricultural and forestry land with the permission of the competent metropolitan and county government office of the location of the real estate.

The permit is not required if the applicant is a 

- national of a Member State of the European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Portugal, Slovakia), 

- a legal person or an organisation without legal personality, or a national of a State party to the Agreement on the European Economic Area (Norway, Liechtenstein, Iceland), a legal person or an organisation without legal personality, or 

- if the applicant is a Swiss national, and, if he(she is a dual national, if one of his nationalities is Hungarian or a national of a Member State, and

- Hungarian nationals living abroad, in the case of acquisition of immovable property and inheritance, and 

- British nationals who exercised their right of residence in Hungary before the end of the transitional period and who continue to reside here after that date are not covered by the definition of foreign natural persons, given that they are considered as nationals of a Member State of the European Union and of a State party to the Agreement on the European Economic Area under an international treaty. 

However, all other British citizens are considered foreign nationals and may acquire real estate in Hungary on the basis of a permit.

To obtain a permit, an application in the form specified in the relevant government decree must be submitted to the government office of the capital and county in which the property is located.
If the applicant is not acting in person, a power of attorney given to a legal representative or other natural person acting on his/her behalf must be attached. 

The power of attorney must state that the power of attorney also applies to the procedure for obtaining a foreign real estate acquisition permit before the Government Office.

The applicant's legal representative is required to use electronic means and must submit the application by e-filing.

The administrative service fee for the procedure will be HUF 65 000 per property in 2025. A foreign natural person who is a person with the right of free movement and residence or long-term residence and has applied for Hungarian citizenship will have to pay an administrative service fee of HUF 13 000 for the procedure for obtaining a permit for the acquisition of his/her residential property.

The acquisition of real estate must be authorised in the default case if the identity of the foreign natural person or the identity of the branch or commercial representation of the foreign legal person can be established with reasonable certainty.

The application must be accompanied by a copy of the applicant's identity card, passport or driving licence certified by a legal representative or notary. In the case of a legal person, the application must be accompanied by a certified or notarised company certificate not more than 21 days old. It must also be accompanied by a certified contract or deed (contract of sale or gift) for the acquisition of the property, which establishes the intention to transfer ownership of the property. In all cases, the contract must comply with the requirements of the new Land Registry Act.

If the applicant is a foreign natural person who has had a registered place of residence, domicile or accommodation in Hungary for at least 5 years continuously and has been employed for at least 3 years in total during this period, a certificate of employment issued by the state tax authority must also be enclosed.

The administrative deadline for the procedure for the acquisition of real estate by foreigners is 45 days. During the approval procedure, the Government Office will check whether the annexes to the application have been submitted. If necessary, the Government Office will invite the applicant to submit a single request for completeness.

The Government Office will obtain a declaration from the municipality in which the property is located as to whether the acquisition of the property is in the interest of the municipality. The Government Office also contacts the National Directorate General for Aliens and the National Police Headquarters to investigate any possible harm to the public interest (deportation, entry and residence ban, arrest warrant) in relation to the foreign natural person.

In addition, in connection with the question of public interest, the Government Office obtains ex officio data on the foreign natural person's criminal record. Once the replies to the requests have been received, the Government Office will decide whether or not to authorise the acquisition of the property.

If the statutory conditions are met, the Government Office will grant the application for acquisition by decision. If the acquisition of the property is contrary to the public interest or the interests of the municipality, the application for the acquisition of the property must be rejected. Administrative proceedings may be brought against the decision within 30 days.

If you have any further questions regarding the acquisition of real estate by foreigners, please contact Ecovis Zalavári Legal Hungary.

This blog article is for information purposes only and does not constitute an official legal opinion or legal position applicable to an individual case. Ecovis Hungary Legal disclaims any legal liability for the use of this blog article in an individual case.

The change in the Uniform Activity Classification System for all companies in 2025 will result in a change in the main activity. The reason for the change in the TEÁOR classification is that in the changing economy, new activities have been created, the content of previous activities has changed and, in view of this, the original classifications could in many cases no longer cover the business processes that actually take placeOn 1 January 2025, the Central Statistical Office will translate the main activity of all firms into the new activity classification. 

This will automatically change the statistical identifier of all companies.The new principal activity automatically generated by the Central Statistical Office may not accurately reflect the business activity actually carried out by the firm, because the activity scope used under the previous classification may already fall under several different new classification categories.

If the business entity does not accept the proposed activity code, it can ask the National Tax and Customs Administration to change it.In this case, the enterprise will need to initiate a separate procedure with the National Tax and Customs Administration to change the new main activity classification originally created. 

After this procedure, the tax authority will transmit the new information to the Central Statistical Office and other relevant authorities, including presumably the commercial court.Firms will be able to obtain information on their new main activity codes via the Business Gazette and the free business information service available on the internet. 

Additional activities other than the core activity will be available on the website of the National Tax and Customs Administration.An important deadline will be 1 July 2025, as all companies will have until then to decide on the new activity classification and notify it to the tax authorities. Any company that misses this deadline will have its activities affected by the change removed from the system by the National Tax and Customs Administration.

The new principal activity, as amended until 1 July 2025, will have to be included in the company's articles of association or memorandum and articles of association when the company changes its company data.

By contrast, a principal activity changed after 1 July 2025 will be required to be shown as new data in the articles of association immediately upon the decision being taken.

The additional activities will only need to be corrected in the articles of association when the organisation amends this document for any other reason.

The provision that exempts the company from fees and publication costs in the procedure before the Court of Justice if it amends the instrument of constitution solely because of the new activity classification is a positive one.

The Central Statistical Office has developed a programme, which it has published on the internet, to help identify the old TEÁOR 2008 numbers in line with the new TEÁOR'25 classification.

The author of the article is Dr György Zalavári, lawyer and managing partner of Ecovis Zalavári Legal Hungary.

Lawyers may also act as real estate brokers pursuant to Section 64/C (5) of Act LXXVIII of 1993 (hereinafter: Housing Act) and Act LXXVIII of 2017 on the Activities of Lawyers (hereinafter: Lawyers Act).

For those interested in this topic, please read the interview with Dr. György Zalavári, attorney-at-law, on the ingatlan.com Knowledge Base.

In order to act as a real estate agent, lawyers do not need a special qualification, which is mandatory for other real estate agents, due to their legal qualifications and experience in real estate, but they must meet the other conditions set out in the Government Decree 499/2017 (XII. 29.) on the conditions for the commercial conduct of real estate agency activities and the detailed rules of registration, and they must also be registered by the real estate business supervisory authority.

They can also act as estate agents without the above-mentioned OKJ qualification. According to the legislation, this is a so-called additional activity which lawyers may perform in addition to their traditional duties as lawyers.

A lawyer wishing to practise as a real estate agent on a complementary basis must not only meet the statutory requirements for practising as a lawyer, but also the requirements laid down in the legislation governing the activity of real estate agent.

A specific requirement for lawyers is that they may only act as a classic lawyer and as a real estate agent for the same client in the same transaction at the same time if the client gives his express written consent. In such cases, the drafting and countersigning of the sale and purchase contract may be carried out by another member of the law firm instead of the lawyer acting as real estate agent.

If you want to sell a property, you should contact a lawyer who is also a real estate agent and who is entitled to act as an intermediary for you in the sale of your property, in addition to his or her traditional role as a lawyer.

The author of the article is Dr György Zalavári, lawyer and managing partner of Ecovis Zalavári Legal Hungary.

Gambling enthusiasts and the potential accumulation of winnings from week to week is what keeps a large proportion of the country's population excited about the numbers drawn in the weekly Five Lottery draw. They are more hopeful that if they hit a winning combination, their lives could be fundamentally changed. The very first draw of the Five Lottery was on 7 March 1957 and at the time of writing, the largest prize so far was recorded as 6,523,768,955 forints.

But what are the rules for this popular game?

The legal background to the Five Lottery is provided by Act XXXIV of 1991 on the organisation of games of chance. The authority responsible for the supervision of gambling is the Authority for the Supervision of Regulated Activities (hereinafter "the Authority"), which also supervises the operation of the Five Lottery, and only the state games organiser is authorised to organise this game.

The Five Lottery is also governed by the Promoter's Five Lottery Rules of Participation.
According to the law, a lottery is a game of numbers organised at the same time intervals and authorised by the Authority under the name "lottery", in which a predetermined number of numbers in a given set of numbers entitles the player to a prize.

In a numbers lottery, the organiser is required by law to award a predetermined prize to the holder of a ticket purchased for a predetermined purchase price if one or more numbers in the ticket number sequence match the number drawn in the public draw.

Are there any legal proceedings related to lotteries?

The history of court decisions includes more than one decision where the lottery was the subject of litigation. These cases typically involve several people playing the lottery together and then one of the players, to the exclusion of the others, alone collecting the winnings from the lucky winning ticket. This is fine when the others might realise that there is a benefit to playing the lottery together and it has not been shared by the other player who cashed the ticket, if they cannot agree among themselves, their case does not end up in a court case. In one such case, the Curia ruled that joint lottery winnings are subject to the parties' either oral agreement and the civil law rules on community property. The result in that case was that the partner who had concealed the prize had to share the lottery winnings with the others on a pro rata basis.

What is the prize pool?

In the context of the lottery, the law also stipulates that the prize pool is the product of the number of tickets purchased and their price, of which at least 40% must be used for prizes. In the five numbers lottery, you have to choose 5 out of 90 numbers and you win if you get as many of the 5 winning numbers as possible in the weekly draw. You need to hit at least 2 numbers to win something, and you need to hit 5 numbers to win the jackpot.

How to play the Five of a Kind lottery?

The Five of a Kind lottery can be played with your own numbers and random numbers, on paper or digitally. Bets can be placed on numbers from one to five weeks in advance. If no-one hits the five numbers drawn in a given week, the prize pool for the five winning tickets is added to the following week's winnings, significantly increasing the amount that can be won and typically the amount of money that can be won that week. This weekly accumulation can last up to a year if no one hits all the numbers week after week. If there are no five-hitters for a year, the jackpot is distributed among the other winners according to the participation rules. But it's not just the full-match prize pool that accumulates from week to week, because the same happens if there are no two, three or four-match tickets with the prize pools created for them.

How do I get the prize?

If a player has a full lottery ticket, his/her grand prize will be paid by the game operator only after verification and identification by bank transfer, no cash payment is possible. The organiser will deduct personal income tax from the winnings before payment, so there is no obligation to declare and pay tax.

The author of the article is Dr György Zalavári, lawyer and managing partner of Ecovis Zalavári Legal Hungary.

 When a new business is born, one of the central questions is what name the owners should give to their new company, especially if they want to use it to advertise their business, even to create a new brand. But when it comes to the use of a company name, there are rules that limit the imagination of members and shareholders. 

Act No V of 2006 on company registration, court proceedings and winding-up (Ctv.) lays down the rules and provisions that set the framework for the choice of company name. A company name must consist of two, typically three, elements. The two obligatory elements are the keyword, which is the first element in the company name, and the unique element, which can be a creative fancy name to help identify the company and distinguish it from other companies with the same or similar activities (e.g. Wolters Kluwer). The keyword can be a Hungarian or foreign language term, an abbreviation or even an acronym. It is also an important rule that it should be defined in Latin letters and Arabic numerals. 

Another mandatory element of the company name is the name of the chosen company form (e.g. limited liability company, limited partnership). The abbreviated version of these in the short name is a kft., bt. or zrt. In addition to these, a third term indicating the activity (e.g. service or trade) may also be included in the company name. In the company name, the term referring to the activity and the chosen company form may only consist of Hungarian words, in accordance with the rules of Hungarian spelling. In the company name, abbreviations are only possible in the case of a keyword or when defining the company form. 

This rule provides guidance to companies on whether a multi-word keyword in an abbreviated name can consist only of initials (e.g. Men In Red Korlátolt Felelősségű Társaság and M.I.R. Kft.). The answer to this question is no, as a rule, the prefix cannot be abbreviated in the short company name, it must appear in the same way as the full company name. The abbreviated name of the company consists only of the motto and the designation of the form of the company (e.g. Men In Red Ltd.). 

The company name must be clearly distinguishable from the name of any other company registered in the country. The company name must not give the impression that it is misleading as to the company's field of activity and the form of the company chosen, and must also be clearly distinguishable from the official and colloquial names of public authorities and administrations. 

A court decision has also pointed out that where the name of a company refers to a particular activity, it must not give the impression that it is engaged in an economic activity which it does not, or could not, in fact carry out, because the company name cannot be misleading in that context either. Thus, it cannot be a "tax authority limited company." or "limited liability limited partnership". Nor may the name of the company include the name of a person who played a leading role in the establishment, development or maintenance of authoritarian political regimes in the 20th century, or the name of a term or organisation directly associated with an authoritarian political regime in the 20th century. 

The company name may also include the name of the owner or members of the company. In its decision on the use of a family surname as a company name, the Curia also ruled that the identity of a surname and a company name does not mean that the natural person concerned can automatically be identified with the company. It also allows the name of the company to be defined in a term, even if used as a surname by others, which is not used as a proper name by the owners or the managers. 

If the company is established for non-profit purposes and carries out non-profit activities, the non-profit character of the company must be indicated in the company name before the indication of the legal form (e.g. XY Nonprofit Ltd.), and in the case of public benefit status, this organisational capacity may be indicated in the company name (e.g. XY Public Benefit Ltd.). 

The terms "state" or "national" may appear in the company name only if the state directly or indirectly holds a majority stake in the company, or if the company is permanently state-owned, or if a government decision authorises it to do so in connection with the performance of a public task of major importance. 

The name of an eminent historical figure (e.g. Petőfi) may be used in the name of a company with the permission of the Centre for the Study of Humanities (in Hungarian: Bölcsészettudományi Kutatóközpont), and a name in which another party has a legal interest (e.g. the use of an already registered trade mark or a unique identifier, trade or other name) may be used only with the consent of the rightholder. Interestingly, the opinion of the Centre for the Study of Humanities is not required if it is clear from the company documents that the name of a member of the company is included in the company name. Thus, if the owner of the company is called Lajos Kossuth, he or she is able to set up Lajos Kossuth Ltd. without any further authorisation. 

If two new companies apply to register the same name with the same name, the court will approve the application of the one that filed the application for company registration first or the one that used the name reservation. 

The author of the article is Dr György Zalavári, partner lawyer. Ecovis Zalavári Legal Hungary.

Photo by Jon Tyson on Unsplash . Thanks!

Please find the blog article about the Hungarian White Card for digital nomads on the link below:

https://www.ecovis.com/global/hungary-white-card-for-digital-nomads/

Photo by David L. Espina Rincon on Unsplash  

Hungary, with its rich history, vibrant culture, and strategic location in Central Europe, has become an increasingly attractive destination for real estate investors. Whether you are looking for a cozy apartment in Budapest, a picturesque countryside home, or a commercial property, the Hungarian real estate market offers diverse opportunities. This guide will walk you through the essential steps and considerations for purchasing real estate in Hungary.

Understanding the Market 

Before diving into the buying process, it's crucial to understand the Hungarian real estate market. Budapest, the capital, is the most popular area for property investment due to its economic significance and cultural appeal. Other regions, such as the Balaton Lake area and cities like Debrecen and Szeged, also offer promising investment opportunities. 

Legal Regulations for Foreign Ownership 

Foreigners can purchase real estate in Hungary, but there are some restrictions. Non-EU citizens need to obtain a permit from the local government office, which usually takes a few weeks. EU citizens face fewer restrictions and can buy property under similar conditions as Hungarian citizens. You can also buy property via a Hungarian company. Purchasing arable land for a foreigner citizen is strictly limited in several cases and a complicated procedure is required. 

Property Ownership

Hungary recognizes various forms of property ownership, including exclusive, common ownership and condominiums as a mixed type. Exclusive ownership is the most common and provides the buyer with complete ownership of the property and the land it stands on. 

Finding a Property

Several online listings and property portals provide advertisements for real estates in Hungary. Websites like ingatlan.com, otpotthon.hu, realtorlawyers.hu and realestatehungary.hu are popular and provide extensive listings of residential and commercial properties. 

Legal Due Diligence, Technical Property Inspection

Before making an offer, it’s essential to inspect the property thoroughly. Ensure that the property has a clear title and is free from any encumbrances. This step typically involves checking the Land Registry and obtaining a certificate of ownership. It is crucial to engage a real estate lawyer who can check the legal background of the real property and ensure all legal aspects are covered, and represent you in the complete procedure. Make sure to choose an lawyer who is fluent in your in English. Also consider hiring a professional surveyor and architect to assess the property's condition and identify any potential issues. 

Financing the Purchase

Both Hungarian and international banks offer mortgages to foreign buyers. The terms and conditions vary, so it's advisable to compare different offers. Non-residents may face stricter lending criteria and higher interest rates. 

Currency Considerations

Since Hungary uses the Hungarian Forint (HUF), currency exchange rates can impact the purchase cost. It’s wise to monitor exchange rates and consider using a foreign exchange service to lock in favourable rates. 

The Buying Process Once you find a suitable property, you can make an offer. If the seller accepts, a preliminary agreement is signed, and a deposit (usually 10% of the purchase price) is paid when you signed at least a preliminary contract. 

Be careful with the realtors!

  Be aware of signing any documents offered by realtors, they are not entitled to formulate legal documents. Numerous legal cases generated by their false, incorrect or invalid documentation prepared without legal education and right to practice law. Also, realtors’ agreement are often very tricky in Hungary, they often use conditions advantages just for themself and the state attorney office challenges continuously such invalid, abusive realtor engagement agreements in the representation of the public. The big realtor networks are not exceptions, their franchise members are usual defendants in such litigations. 

Instead, contact your lawyer as a first step, they are legally educated and allowed to elaborate legal documents, and it is advised to check with them the realtor’s contract. 

Signing the Contract

The final purchase contract is drafted and countersigned by a lawyer. This contract outlines all terms of the sale, including the purchase price, payment schedule, and transfer date. 

Registration

After signing the contract, the property must be registered with the Land Registry with the assistance of a lawyer. This step officially transfers ownership to the buyer and typically takes a few weeks. 

Costs and Taxes

In addition to the property price, buyers should budget for additional costs, including: - Legal fees: 1-2% of the purchase price - Registration fees: Approximately HUF 6,600 (from the end of July 2024 it is HUF 10,600) - Real estate agent fees: 2-5% of the purchase price  

Duties, taxes

The basic transactional duty associated with real property purchase is 4% of the market value.  The tax authority may alter from the purchase price if it considers it less that the real market value. There may also be other local taxes and fees. 

Renovations and Maintenance If the property requires renovations, hiring local contractors and obtaining necessary permits will be essential. Regular maintenance is also crucial to preserve the property's value. 

Property Management

For investors who do not plan to reside in Hungary, hiring a property management company can be beneficial. These companies handle tenant issues, maintenance, and ensure the property is well-kept. 

Conclusion

Buying real estate in Hungary can be a rewarding investment, offering opportunities in a diverse and growing market. By understanding the local market, navigating the legal landscape, and conducting thorough due diligence, you can make a successful and informed purchase. Whether you're seeking a permanent residence, a vacation home, or an investment property, Hungary's real estate market has something to offer. 

If you plan to purchase a real estate in Hungary, contact Dr György Zalavári, lawyerand partner of Ecovis Zalavári Legal  Hungary. 

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
 Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The answer is simple: yes, you can. Although the Hungarian Civil Code has allowed this possibility for many years, in practice we find that this solution is more often used in the structures of foreign companies.

According to Hungarian law, it is possible for a company to have a legal entity as its managing director, but in this case the legal entity is also obliged to appoint a natural person to act as managing director on its behalf.   

In relation to this natural person, the legal provisions and restrictions that would otherwise apply to the appointment of a natural person as a managing director should also be examined.

In the case of Hungarian companies with a foreign parent company, it also happens that the managing director of the foreign company is another company, and the managing director of this other company is also another company.In such a case, not only the company certificate of the foreign parent company but also the company certificate of the company of the managing director of the foreign parent company must be submitted in the Hungarian company procedure when the Hungarian company is established. 

This is necessary because the application for company registration must be accompanied by the document from which the right to represent the foreign member can be established, and this also applies to the other company representing the foreign company.

 Although this document is not listed as a mandatory attachment in the Act on Company Procedure, it is a requirement that can be deduced from the general rules. 

Based on the practical knowledge of the lawyer Dr. György Zalavári, the author of this article, it is important to note that the prosecutor's office investigating the proceedings of the commercial court will pay attention to this element and, in case of its absence, will bring an action against the registration order even if the commercial judge has decided on the registration of the company without it.

However, it can create an unpleasant situation in the life of the company if bankruptcy or liquidation proceedings are initiated against the other company representing it, because it is then recommended to take immediate action to change the company's representation. Otherwise, it may even happen that the bankruptcy trustee or liquidator of the other company becomes the natural person entitled to act on behalf of your company. 

Therefore, if another company is the managing director of our company, it is important to keep a close eye on its legal status and operation and, if necessary, to take swift and timely action to change the representation.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In the case of a gift, the donor transfers the ownership of an object to the donee free of charge, with the possibility of reclaiming it under certain circumstances.

One of the legal bases for reclaiming a gift is if the donor needs it for his/her subsistence. It is important to note that only the gift still existing can be recovered and only if its return does not endanger the subsistence of the donee. The donee is not obliged to return the gift even if the donor adequately provides for the donor's subsistence by means of an annuity or maintenance in kind.

The gift may also be recovered for a serious infringement committed by the donee or a relative living with the donee at the expense of the donor or a close relative. In addition to the above, it is also possible to claim not only the existing gift, but also the value of the value of the gift that has been replaced. 

A serious breach of a criminal offence or a breach of a legal obligation is considered to be a serious breach, provided that a final court or administrative decision is not a prerequisite for the claim to be enforceable, but the mere deterioration of the relationship between the parties or the lack of respect for the donor is not sufficient.

 The gift cannot be recovered if the gift or the value substituted for it is no longer present at the time the infringement was committed.

Finally, the donor can also claim the gift back if he or she has subsequently made the gift on the basis of a presumption that has been permanently frustrated, without which the gift would not have been made. Three conditions must be considered in this context: (i) the transaction was based on a presumption; (ii) without the presumption the transaction would not have been concluded; (iii) the presumption was subsequently permanently frustrated. In the examination, the circumstances surrounding the gift must be carefully weighed, for example, 'the relationship which existed between the donor and the donee before the gift was made is of great importance; the value of the object of the gift must also be examined, and in connection with this whether the gift is so significant that it may be reasonably inferred that the donor was in fact induced to make the gift by the presumption which he had put forward' [PK. 76]. 

The gift cannot be recovered or the value substituted for the gift cannot be claimed if the failure of the assumption on which the gift was based was caused by the donor's wrongful conduct.

The gift can never be reclaimed at the normal rate, but it can never be reclaimed even if the gift-giver has forgiven the offence. Forgiveness or waiver of reclaiming is when the gift-giver does not reclaim the gift after a long period of time without good cause.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu