Hungarian restrictions on foreign financing of civil organisations incompatible with EU law

The restrictions imposed by Hungary on the financing of civil organisations from abroad are not compatible with EU law as they infringe the principle of free movement of capital and a number of fundamental rights, in the opinion of Advocate General Campos Sánchez-Bordona.

In 2017, Hungary adopted a law in order to ensure transparency in civil organisations that receive donations from abroad. Under that law, such organisations must register with the Hungarian authorities as ‘organisations in receipt of support from abroad’ where the amount of the donations they have received in a given year reaches a certain threshold.

When registering, those organisations also have to indicate the name of donors whose support reaches or exceeds 500,000 Hungarian forints (HUF) (approximately €1,500) and the exact amount of the support. That information is later published on a free, publicly accessible e-platform. In addition, the civil organisations concerned must indicate on their homepages and in their publications that they are an ‘organisation in receipt of support from abroad’.

The Commission brought an action for failure to fulfil obligations against Hungary before the Court of Justice. It claims that the law on the transparency of civil organisations financed from abroad infringes both the principle of free movement of capital and a number of rights protected by the Charter of Fundamental Rights of the European Union: the right to respect for private life, to protection of personal data, and to freedom of association.

In his Opinion, Advocate General Manuel Campos Sánchez-Bordona takes the view that the transfer of a donation from abroad in favour of a Hungarian civil organisation is a movement of capital.

In Hungary, that movement of capital is subject to conditions such as the obligation imposed on certain civil organisations to register as ‘organisations in receipt of support from abroad’ and the publication of certain data. However, those conditions apply solely in the case of donations coming from abroad, as a result of which they are much more likely to affect nationals of other Member States than Hungarian nationals.

In those circumstances, the Advocate General is of the opinion that those conditions amount to a restriction of the principle of free movement of capital, both with regard to the organisations affected, which may have to cope with financing difficulties and whose exercise of the right to freedom of association may be limited, and their foreign donors, who may be dissuaded from making donations on account of the possible stigmatising effect of the publication of the details of those transactions, because they express an ideological affinity that might be compromising in the Hungarian national context.

Read the full opinion here