HUNGARY LAW AND PRACTICE Contributed by: Pál Szabó, Barnabás Simon, Eszter Katona, Ádám Simon, Mihály Harcos, Karim Laribi, Gábor Kutai and István Szalay-Csala, Bird & Bir d
back into technical recession, growth has remained anaemic, with GDP forecast to increase by a mere 0.8-0.9% for the year. Hungary’s inflation, which peaked above 25% in 2023, has moderated significantly but remains above the Hungarian National Bank’s tolerance band, with the Hungarian National Bank forecasting 4.5% by Q4 2025, declining to 3.1% by Q4 2026. The Hungarian National Bank continued its monetary easing policy throughout 2025, and from mid-2025 onwards, the HUF strengthened significantly against both the euro and the US dollar. Hungary’s access to EU funds remained severely constrained throughout 2025, with roughly EUR15 to EUR18 billion still withheld pending progress on rule of law reforms. Hungary’s budget deficit, as a share of GDP, remains relatively high, with projected deficit nearing 5%, a figure that is above the EU average. Hungary’s opposition to opening EU accession nego - tiations with Ukraine has further strained relations with Brussels and complicated discussions around the withheld funds, contributing to Hungary’s growing isolation within EU decision-making. Hungary’s relationship with the USA saw positive developments in 2025, highlighted by the Trump- Orbán summit in early November, signalling strength - ened economic and cultural ties. At the same time, tensions related to the ongoing Russia-Ukraine armed conflict have affected Hungary, particularly around oil and gas supplies. The termination of the double taxa - tion treaty between Hungary and the USA, effective from 2024, has not been resolved, generating com - plications in profit repatriation and increasing the tax burden for multinational enterprises operating in Hun - gary. The Hungarian Government’s Response to Challenges In response to ongoing global and regional pressures, the Hungarian government has continued – and in some areas expanded – interventional measures first developed in previous years. These measures include: • maintaining exemption from EU and US sanc - tions on Russian oil imports to avoid disruptions
to domestic energy supply, while simultaneously exploring alternative sources; • maintaining the “extra profit” tax on financial institutions, with plans to double revenues in 2026 through higher rates and reduced deductions; • postponing certain public investment projects, notably in infrastructure and non-strategic develop - ment, to cap government spending and manage heightened debt levels; and • updating the Foreign Direct Investment (FDI) screening regime, maintaining the state’s pre-emp - tion right for solar power plant transactions, whilst recent legislative reforms have simplified general FDI reviews and removed the state’s pre-emption right in relation to other transactions. It should be noted that the 2018 FDI Act and the 2025 FDI Act apply in parallel; if an investment triggers both regimes, two separate notifications must be filed and prior approvals from both ministries must be obtained before completion. The government introduced social and fiscal meas - ures to bolster domestic demand and ease inflationary pressures, including personal income tax exemptions for mothers with two or more children, broadened family tax benefits, continued payment of the 13th month pension, and a planned 14th month pension to begin in 2026, and selective wage increases in priority industries. New projects by companies such as Sunwoda, W-Scope, EcoPro, SEMCORP, Gotion and BYD are expanding Hungary’s battery manufacturing capac - ity across materials, components and assembly, with several facilities representing each firm’s first major presence in Europe. Despite US policy emphasis on reshoring, US-based multinationals continue to expand in Hungary, particularly in research, develop - ment, and technology-intensive segments. Deal Activity in 2025 Strong fluctuations in quarterly M&A activity continued throughout 2025, with Q1 marking the lowest first- quarter deal count in recent years. The first half of 2025 remained below both the long-term benchmark (-9%) and the same period in 2024 (-23%).
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