In a Preliminary Opinion which was issued and sent to the Hungarian authorities on 2 June 2017, the following recommendations were made:
As concerns the procedure:
- A public consultation concerning the Draft Law should be conducted before the final
adoption of the Draft Law. The public consultation should involve, as far as possible,
all civil society organisations the status, financing or spheres of operation of which
will be affected as a result of the entry into force of this legislation.
As concerns the substance:
- The rationale behind the exclusion of a number of associations and organisations
from the scope of application of the Draft Law is not entirely clear, as the
requirement of transparency should certainly apply to all civil society
organisations. The relevant provision (Art. 1(4) of the Draft Law) should therefore
either be justified in clearer terms, or deleted;
- The period of three years during which a civil society organisation may not receive
any foreign funding in order to be entitled to initiate a deregistration procedure
(Article 4 of the Draft Law) is quite long and appears to be arbitrary. It is
recommended to replace it with a one-year period. This would not, in any way,
hamper the objective of the Draft Law and would also make the registration and
deregistration procedures more coherent;
- The data included in the register and made public should be limited to the major
sponsors in order to ensure that no excessive obligation is imposed on
organisations receiving foreign funding. Article 1(2) of and Annex 1 to the Draft
Law should be amended accordingly;
- The obligation imposed under Article 2(5) of the Draft Law, that the relevant
organisation should mention that it qualifies as an organisation receiving support
from abroad on all its press products and publications, appears to be excessive
and should be removed;
- The Draft Law should expressly provide for the proportionality principle under
Article 3 relating to sanctions, which should only apply to instances of nonfulfillment
of the most important obligations and/or to instances of serious nonfulfillment
of obligations. Reference to the sanction of dissolution for failure to fulfil
the obligations under the Draft Law (Articles 3(3) and 6) should be deleted.
Measures taken by the State
On 13 June 2017, the Hungarian Parliament adopted the Law with certain amendments, notably:
- An additional exception has been added for “national minority organisations and associations under Act CLXXIX of 2011 on the rights of national minorities and to foundations performing, under their instrument of incorporation, the protection and representation of the interest of a certain national minority, or activities directly connected to the cultural autonomy of a national minority”;
- The obligation to disclose the identity of individual donors has been limited to donations of more than 500 000 forints (around 1 600 euros);
- The reference to the dissolution as an automatic sanction has been removed and a reference to the proportionality of the sanctions has been added;
-Deregistration is now possible if no important foreign funding has been received during 1 year.
These measures were commented upon in an opinion adopted during 111th Plenary Session of the Venice Commission (16-17 June 2017). In this Opinion, the Commission recognised that some of these amendments represent an important improvement, but considered that some other concerns were not addressed and the amendments do not suffice to alleviate the Venice Commission’s concerns that the Law will cause a disproportionate and unnecessary interference with the freedoms of association and expression, the right to privacy, and the prohibition of discrimination.
Similarly to the Venice Commission Opinion, the European Court of Justice (ECJ), in June 2017, found that restrictions imposed were “discriminatory and unjustified” and went against EU law, as they violated the freedom of movement of capital, the right to respect for private and family life, the right to the protection of personal data and the right to freedom of association.
On 18 May 2021, the Hungarian Parliament repealed the Law on the Transparency of Organisations receiving support from abroad adopted in 2017 and replaced it with a new Law.
Under the new Law, as of 1 July 2021, the registry of civil organisations shall not mention that a civil organisation is financed from abroad. Any such remarks in the registry shall be deleted and all the pending procedures shall be terminated without application of any sanctions. However, a new rule prescribes that the State Audit Office, which is responsible to Parliament, annually prepares a report on civil organisations and foundations (with some exceptions, including churches and sports clubs, that tend to receive more funding) if their annual financial balance is more than 20 million forints (approximately 56 000 euros). The rule is applied irrespective of the source of income (public or private).