According to the National Employment Service’s study on foreign workers, at the end of 2023, there were a total of 87,661 work permits in force, a figure that has increased significantly in the last two years, with only 34,000 valid permits at the end of 2021 and slightly more than 51,000 in 2022.
In this labor market environment, the Act on General Rules for the Admission and Right of Residence of Third-Country Nationals came into force at the beginning of 2024, which is much more complex than the previous legislation and addresses the residence and employment of third-country nationals in a single streamlined law.
The New Law
The preamble to the act clearly states that it tightens and clarifies the legal titles and conditions of residence and employment of foreign nationals in Hungary. All third-country nationals may reside in Hungary only as long as and in a manner permitted by the Hungarian state, and, as long as there is a Hungarian workforce, jobs must be filled by Hungarian workers.
The legislation introduces new concepts and distinguishes between separate permanent residence titles. It differentiates long-term residence for business or investment purposes (as a guest investor), for employment purposes as a migrant worker (e.g., holding a residence permit issued for the purpose of taking up employment for the implementation of an investment), for the purpose of employment as a highly qualified worker or as an experienced professional in a field of particular importance for the country (e.g., a holder of a Hungarian card, the holder of an EU Blue Card, or an intra-corporate transferee), or for any other reason specified by law (e.g., for study purposes, for medical treatment, or for family reunification).
The time limit for the procedural administration of these residence permits is 21 days from the submission of a complete application. However, the time period for correcting deficiencies (e.g., submitting missing documents) and for carrying out various other procedural actions is not included in this time period. Nevertheless, the new time limit is significantly shorter than in the previous procedure, considering that procedures were at least two months long in the past.
Perhaps one of the most important changes compared to previous legislation is a more vigorous crackdown on illegal migration as well as tightening up rules on asylum seekers. In addition, regulated and rigorous labor market support for large investments is also implemented.
Golden Visa Program
The main condition for obtaining a residence permit for a guest investor, in addition to meeting other, mainly technical and (national) security requirements, is that the guest investor makes one of the following investments in Hungary: (a) the acquisition of a share in an investment fund issued by a real estate fund registered by the Hungarian National Bank in the amount of at least EUR 250,000, (b) acquiring the ownership interest over a property (a residential property with a value of at least EUR 500,000 located and duly registered in the territory of Hungary and free and clear of all liens, claims, and encumbrances with respect to properties acquired after January 1, 2025), or (c) a financial donation in the amount of at least EUR 1 million for a purpose of educational, scientific research, or artistic creation activities to a higher education institution maintained by a public trust with a public-service mission.
The details of the scheme that requires an investment of EUR 250,000 are still being finalized at the time of writing as the legislator and the relevant certification bodies still have a lot of work to do to get the product on the market. In addition, the fact that the residential option will only be available as of January 1, 2025, means that third-country investors will have to wait. They might also face FDI regulations still in force when the programs are in full swing. If the transfer involves real estate indispensable for the exercise of activities in sectors specified in the related government decree also determining the term for the foreign investor (i.e., a national of a state outside the European Union or the European Economic Area) acquiring such real estate, a notification to the minister and approval of the notification might also be required.
Conclusion
Some of the goals set (e.g., creating a clearer and more comprehensible legal environment, and reducing the burden on the authorities) may be achieved by the introduction of the new regulation, but it is questionable whether Hungary will not lose its competitive advantage in the region in the competition for guest workers.
By Ilona Boros, Partner, Szabo Kelemen & Partners Andersen Attorneys
This article was originally published in Issue 11.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
