According to experts, the proposed Hungarian regulation encouraging capital inflows from third countries (i.e. countries outside the European Union) to Hungary, is considered quite favourable in international comparison. In accordance with a bill submitted to Parliament a foreign national, who have purchased Hungarian government bonds worth at least EUR 250,000 (approximately HUF 70 million) with a minimum 5-year maturity will be granted permanent residence permit in Hungary in a preferential procedure within six months instead of three years being applicable in non-preferential procedures.

"Although the final version of the bill is not yet adopted, there is an increasing number of enquiries from foreign nationals in relation to investment-based permanent residence permits, in particular from China, the Middle East and Russia", said János Tamás Varga, Managing Partner of VJT & Partners law firm. According to Varga there has been a competition amongst the Member States of the European Union for third country investors, which the Hungarian government has just joined.

"It was a general opinion amongst foreign nationals that due to the strict requirements, it was rather difficult to obtain permanent residence permit in Hungary for business purposes. There is an undoubted demand for the preferential treatment policy of the government" added János Tamás Varga. Further to the expert’s professional experience the proposed regulation is attractive for investors, because it would provide Hungarian permanent residency for significantly lower costs compared to other European countries and without requiring prior continuous physical residence in Hungary.

"In accordance with the original bill, the applicant could have the opportunity to arrange his/her application from outside Hungary, if a Hungarian legal representative was retained, however, a later submitted amendment to the bill aims to change this scheme. In accordance with this amendment, the applicant would be obliged to appear in person before the Office of Immigration and Nationality three times", emphasized Varga. According to the available information, the original proposal submitted by a few representatives of the ruling party generated heated disputes in the cabinet. The Ministry of Interior suggested that foreign nationals should not be granted permanent residence permit automatically, but a temporary residence permit for a period of one year. A compromise has been finally reached to the effect that foreign nationals could be able to obtain the final permanent residence permit half year after the commencement of the procedure. "Since in accordance with current regulations, three years of prior continuous physical residence in Hungary is required with the condition that during this three-year period, foreign nationals are allowed to leave the country for a maximum period of 270 days altogether, it is an important aspect for enquiring foreign nationals that there is no need to previously reside in Hungary continuously, almost without any interruption", said Varga. However, according to the proposed new regulation, the applicants will be obliged to appear in person before the Hungarian consulate located in their residence country. In the subsequent stages of the procedure, the applicants will also be obliged to appear personally before the Hungarian Office of Immigration and Nationality to receive their temporary residence permit and then six months later to file for their permanent residence permit and receive it upon its approval.

"The wording of the submitted amendment to the bill leads us to such conclusion", emphasized the attorney-at-law, but at the same time highlighted that it is important to wait for the decree to be issued by the Minister for National Economy, which will specify certain conditions of purchasing government bonds.

According to our government-related sources, the final version of the regulation is rather uncertain. As far as we know applicants remain subject to national security control, although this procedure will be preferential. It is also an outstanding issue what type of government bonds shall be purchased by foreign investors, who intend to reside in Hungary. It is planned to issue foreign exchange bonds denominated in Euro with lower interest rates compared to the market yields. Further to our sources, it is an important question what will happen five years after the purchase of the bonds, when the bonds expire. It is also debated in the government whether foreign nationals should be obliged to either purchase government bonds again or invest their capital into the Hungarian economy. It may also be an alternative scenario, if no further obligation is imposed on foreign nationals. In the latter case it may be envisaged that the Hungarian state will purchase back the expired bonds on their nominal value, consequently the bonds would not bear any interest and the Hungarian state would use them free of charge. Financial experts argue that this specific form of attracting investors may convey a negative message to ordinary investors and lead them to presume that the Hungarian budget is actually in trouble.

Experts said that the proposed Hungarian regulation provided attractive opportunities for foreign nationals. In Austria, citizenship may be obtained by investing millions of Euros, although such investments are not expected to directly finance the government budget. In Bulgaria, a permanent residence permit, similar to the proposed Hungarian one, may be obtained for EUR 500,000, which is twice as much as the amount payable in Hungary. Hungarian permanent residence permit does not either ensure foreign nationals an unlimited mobility in other Member States of the EU since such Hungarian "green cards" entitle foreign nationals to a maximum stay of up to 90 days within every 6 months in any other Member State of the EU. However, it is easier to succeed within the EU with a Hungarian permanent residence permit, Hungarian permanent residency may accordingly serve as a springboard.

“Hungarian Watch is a pioneer concept which helps our foreign clients and partners get a line on Hungarian business life. We are proud to take the lead in presenting this new brand in our Hungarian legal market.” notes, Endre Várady, the quarterly’s editor.

„Hungarian Watch is well recognized by our partners in different countries all over the world. The popularity of earlier issues proved their necessity and the existence of a demand of our clients to such a newsletter”, commented János Tamás Varga, Managing Partner of VJT & Partners.

Hungarian Watch Autumn 2014 is available here.

Mr. Varga also spoke about the recent political steps: „It is noteworthy that the Hungarian Government is ready to grant reduced tax or tax exemptions for definite periods to foreign investors in the case that they decide to achieve their business goals by investing in Hungary.”

The author of the article highlights the importance of Chinese investments as the main boost to the region and recalls the meeting between the Chinese Premier Li Keqiang and the leaders of CEE countries in Romania in November, 2013.

In summary, we can say that the second half of the year 2014 will be challenging for those doing business in the region and in Hungary, but we can declare that the „CEE region is looking more robust than it has for some time.”

VJT & Partners has also developed expertise in Hungarian Business Entrepreneur Program that offers non-EU nationals the possibility to set up business in Hungary, and to obtain Hungarian temporary residence permit.

“This award is a great honour for us, because it is the recognition of the efforts we made to meet all the requirements of our clients. We are really pleased to see that our value-based work has bore fruit and we get a lot of positive feedbacks from our clients.” says Gábor Hacsi Head of Immigration Team at VJT & Partners. “At the same time, this award is an incentive to proceed with what we have commenced on and to continue striving for perfection to grant the best service to our partners” the Head of the Immigration Team adds.

The review published by CEE Legal Matters strengthens our confidence that in today’s world it is not enough to deliver excellent work products to our clients, but the appearance of our work and our website should also be of a high standard and perfectly designed. It is also recognised that the presentation of our values and our professionals’ capabilities is an essential part of our website, so as the legal news and publications section which is transparent, clear, practical, and useful and it has an added value.

János Tamás Varga, Managing Partner of VJT & Partners says: “This award is a great honour for us. It recognises our efforts to express our values in every tiny detail. We are not satisfied until every sentence, every image, every colour and the layout of the website are in accordance with our values. This is the very simple way in which we made our website and how we work in our day to day legal practice.”

The full article of CEE Legal can be read here.

However, he claims that in recent months, investors’ appetite for Hungarian companies has, in general, been growing thanks in part to the improvement in global and European economies and also owing to the changing attitudes of foreign investors who appear to have adapted to the legislative tendencies of the Hungarian government. VJT & Partners has acted on a number of deals in recent months, which underpin this.

Dr. Varga also spoke about the new Civil Code coming into force, which, by removing many restrictive rules, leaves much more room for flexibility and bespoke solutions when establishing and operating a company in Hungary. In his view it remains a big question as to whether the courts will fully adapt to this paradigm shift and actually allow companies to fully take advantage of the opportunities provided in theory by the new civil code.

“There is a general interest on the part of foreign investors to buy Hungarian companies after years of silence,” János Tamás Varga says.

The full article can be read here.

Clients noted of VJT & Partners with respect to private equity that “The lawyers give detailed advice that shows their attention to detail." What is more, managing partner Varga János Tamás is highlighted by clients for his “organisational skills and solid legal expertise”.

In addition, VJT & Partners’ TMT practice was acknowledged as follows: "The firm can really accommodate the business needs of the client. The lawyers are easy to work with and are always thoroughly prepared for negotiations." In relation to this practice area János Tamás Varga is acknowledged by clients for his "knowledge and understanding of the processes and policies of multinational companies," and his "insight into IT."

János Tamás Varga commented: “Our rankings are a great feedback of the team’s excellent quality work provided over the last year. We are glad that VJT & Partners could keep its prominent position in the field of employment, private equity and TMT.”

“Hungarian Watch is a completely new brand. Regularly reporting about potential Hungarian investments is a pioneer concept in our Hungarian legal market. We are proud to make the breakthrough step,” notes, Endre Várady, the quarterly’s editor.

„Hungarian Watch is well recognized by our partners in different countries all over the world. We are pleased to serve our clients and business partners by publishing relevant information about the Hungarian business opportunities.” commented János Tamás Varga, Managing Partner of VJT & Partners.

Having climbed the rankings consistently in recent years, VJT & Partners' M&A and Dispute resolution practices are both recommended in the second tier, while the firm remained in the second tier for TMT and the fourth tier for Real estate and construction. The guide comments: "VJT & Partners’ three-partner corporate and M&A team, which includes the ‘proactive’ and ‘reliable’ János Tamás Varga, provides a service which is ‘excellent in all respects’. Varga and the ‘exceptionally detailed’ Zoltán Csernus worked alongside a leading US law firm to advise ARC Group Worldwide on a cross-border acquisition."

Four lawyers at VJT & Partners are recommended in The Legal 500 Europe, Middle East & Africa 2014 editorial:

• Corporate and M&A - János Tamás Varga and Zoltán Csernus
• Dispute resolution - János Tamás Varga, Zoltán Csernus, Gábor Hacsi
and Dóra Bocskov-Szabó
• Employment - Zoltán Csernus and Dóra Bocskov-Szabó
• Real estate and construction - János Tamás Varga and Gábor Hacsi.

The Legal 500 series of legal directories provides an in-depth assessment of law firms based on intensive independent research of firms and their clients.

János Tamás Varga, Managing Partner of VJT & Partners, commented: “Legal 500 is regarded as providing accurate analysis of law firm capabilities; as such, we are delighted to receive such high rankings in the guide which we take as an endorsement by our clients of our capabilities and practices.”

"I hope that Hungarian Watch Winter 2014 is at least as informative and inspiring as the first issue was," said Endre Varady, editor of the quarterly.

János Tamás Varga, Managing Partner of VJT & Partners, commented “We have received a lot of positive feedback about the first issue. I am convinced that new business opportunities are the most valued developments for dealmakers.” Read more...