Hungarian Government proposes to ease Foreign Direct Investment screening rules (FDI) from 1 January 2027

Hungarian Government proposes to ease Foreign Direct Investment screening rules (FDI) from 1 January 2027

The special foreign direct investment (FDI) screening regime, which has applied to almost all significant acquisitions of Hungarian businesses since 2020, would expire at the end of the year. The general FDI rules, in force since 2019, would remain in place, supplemented only by a narrowly defined notification requirement for high-value acquisitions of majority control by investors from outside the EU, the EEA and Switzerland in six industrial and energy sectors. Responsibility for granting clearance would be consolidated under the Minister of the Interior.

On 4 November 2026, the Ministry of the Interior published a draft bill amending certain laws relating to law enforcement for public consultation. Among numerous other amendments, the omnibus bill would reshape Hungary’s FDI screening framework. It would allow  Chapter IV of Act L of 2025, which sets out the special FDI screening regime, to expire at the end of the year without extending its application. At the same time, it would introduce an additional notification requirement under Act LVII of 2018 on the Screening of Foreign Investments Prejudicial to Hungary’s Security Interests (the “FDI Act”).

Which rules would end?

The special FDI screening regime, introduced during the COVID-19 pandemic and placed on a statutory footing in 2025, applies only until 31 December 2026 under the current legislation. The newly published draft would not extend its application.

For companies operating in strategic sectors, this regime requires notification, in certain circumstances, of investments with a value as low as HUF 350 million. In addition to acquisitions of shareholdings, it covers, among other things, capital increases, corporate transformations and the transfer, granting of rights of use over, or provision as security of assets essential to a company’s operations, except where such security is provided in connection with financing by credit institutions. It applies to acquisitions of shareholdings of as little as 5% by non-EU investors and, subject to certain conditions, acquisitions of majority control by EU, EEA and Swiss purchasers.

The special FDI notification requirement would therefore cease to apply at the end of the year, leaving only the amended FDI Act applicable thereafter.

Key features of the proposed amendment

Under the draft, in addition to the transactions already subject to notification under the FDI Act, notification would also be required where an investor from outside the EU, the EEA and Switzerland acquires direct majority control, through the acquisition of a shareholding, in a company with its registered office in Hungary whose registered principal activity falls within one of the following sectors:

• manufacture of coke and refined petroleum products;
• manufacture of chemicals and chemical products;
• manufacture of pharmaceutical products;
• manufacture of basic metals;
• manufacture of fabricated metal products; or
• electricity, gas, steam and air conditioning supply.

An additional condition would be that either the target company’s net turnover in its most recently completed financial year is at least HUF 180 billion or the transaction value is at least HUF 10 billion. In such cases, the acquisition could be completed only after the Minister has acknowledged the notification, and the procedure would be governed by the existing provisions of the FDI Act.

What could this mean in practice?

The proposed amendment would remove a substantial proportion of transactions in the Hungarian market from regulatory scrutiny. Many transactions currently subject to notification could be completed without a filing, unless they fall within the scope of the general FDI rules that remain in force.

The new requirement would apply only to the sectors listed above, which may be regarded as strategic but are defined considerably more narrowly than under the current regime, and only where the target company is genuinely large or the transaction is of significant value.

For foreign investors, this could mean lower costs associated with the regulatory process, simpler closing conditions and shorter periods between signing and closing. Owners of Hungarian businesses considering a sale could benefit from a broader pool of potential purchasers, while uncertainty surrounding regulatory clearance would be less likely to complicate transaction negotiations.

It is important to emphasise, however, that the existing categories of transactions subject to notification under the general FDI rules would not be narrowed. Non-EU investors would therefore continue to be required to notify acquisitions of shareholdings exceeding 25% or of dominant influence in companies operating in, among others, the defence, financial, energy and communications sectors. These requirements should continue to receive careful attention on a transaction-by-transaction basis.

Comments on the draft may be submitted to the Ministry of the Interior until 12 November 2026. The amendments are scheduled to enter into force on 1 January 2027. Our firm is closely monitoring legislative developments affecting foreign investment. We would be pleased to assist with preparing submissions for the public consultation, assessing the FDI implications of ongoing and prospective transactions, and handling the related notifications.