Shortly before midnight on Tuesday, 13 May, a member of parliament representing the ruling Fidesz party introduced a bill on “Transparency in the Public Sphere”. The proposed legislation aims to restrict the ability of Hungarian CSOs receiving foreign funding to operate. Under the proposed law, if the newly established Sovereignty Protection Office (SPO) determines that a foreign-funded organisation’s activities threaten Hungary’s sovereignty, it may recommend that the government place the organisation on an official blacklist. Some of the most alarming elements of the draft legislation include:
- Broad definition of foreign influence: All funds originating from outside Hungary could be considered a threat to national sovereignty, including grants awarded through transparent processes and official EU tenders from other EU member states.
- Severe operational restrictions: CSOs placed on the list would be prohibited from collecting 1% of personal income tax donations — a key source of public support in Hungary — and would be required to obtain a “fully conclusive private document” from each supporter, confirming that their contribution did not originate from abroad.
- Severe penalties: If any foreign funding is discovered despite compliance efforts, the anti-money laundering authority may impose a punitive fine amounting to 25 times the value of the foreign funds received, to be paid within 15 days.
The likely passage of this bill would be devastating for Hungary’s civil society and independent media. If passed, this law would represent a major escalation in the restriction of civic space and further erode the country’s democratic infrastructure.
Urgent EU Action needed to counteract the law
The European Union must decisively and urgently take legal measures to block the Hungarian legislation. The EU should:
- Request immediate interim measures in the ongoing CJEU case concerning the Sovereignty Protection Act to prevent the enforcement of this bill, which escalates the already serious concerns over democratic backsliding in Hungary.
- Re-open the 2017 Court of Justice case (C-78/18, Commission v. Hungary) on the foreign-funded NGOs law, due to Hungary’s continued failure to implement the ruling, as this new legislation mirrors and intensifies the unconstitutional elements previously condemned by the Court.
- Initiate a New Infringement Procedure against Hungary for the proposed law’s likely breach of EU fundamental rights, internal market rules, and principles of proportionality and non-discrimination, particularly concerning freedom of association and the free movement of capital.
