A proposed legislative initiative in Hungary aims to introduce a framework for categorizing and penalizing civil society organizations and media outlets that accept foreign financial support.

The legislation seeks to create a list of organizations deemed 'influential,' potentially stifling their operations and considerably impacting their ability to function within the public sphere.

The Szuverenitásvédelmi Hivatal (Office for the Protection of Sovereignty) would be responsible for designating organizations as 'influential,' with the ultimate decision resting with the government.

Organizations identified under this classification would face significant consequences.

Their executive officers, founders, and supervisory board members would be classified as 'prominent public figures,' subjecting them to mandatory asset declarations.

This classification potentially expands the scope of those considered prominent, complicating the personal and professional lives of those involved with affected foundations, associations, and business entities.

The legislation requires that supporters provide a notarized, fully verifiable document—often deemed impractical.

Notably, the proposed law does not define a value threshold for the support received, implying that all forms of assistance to these organizations would be subjected to this stipulation.

Furthermore, the bill mandates that financial institutions closely monitor these funds, necessitating reporting to the National Tax and Customs Administration (NAV).

Given the ambiguity surrounding which transactions require permission, financial institutions are likely to report all relevant activities to the NAV.

The NAV will employ undefined criteria to determine transaction authorization or investigation, a process that could entail delays lasting up to six months.

Critics argue that this would allow for unrestricted suppression or termination of economic activities by classified organizations, impacting their operational viability.

Concerns also highlight potential conflicts with Hungary's foundational legal principles and other regulations pertaining to organizations.

The legislation includes provisions for on-site inspections, diverging from usual administrative procedures.

These inspections could permit authorities to search vehicles, homes, and offices for evidence, potentially extending to the examination of documents, computers, and mobile devices.

The proposed legal framework suggests that there is no recourse against governmental classification decisions.

Affected parties could only challenge NAV decisions directly with the Curia, Hungary's highest court, rather than through the customary administrative court system.

Within this context, the Curia may annul NAV decisions but is barred from altering them.

Legal experts have remarked on the unusual involvement of the Curia in these matters, asserting that this shift may thwart independent judicial decision-making and limit the opportunity for recourse to the Court of Justice of the European Union, which could raise significant implications for the rule of law and democratic governance in Hungary.