Hungary adopts Act on National Asset Recovery Protection and amends Fundamental Law

On 28 July 2026, the Hungarian Parliament adopted the act on the National Asset Recovery and Protection Office (NVVH), which is responsible for protecting public assets, and identifying and recovering assets unlawfully managed or used. In addition, the NVVH is vested with investigative powers, is authorised to represent the public prosecution before courts, can pursue civil claims arising from criminal acts and can carry out asset recovery and asset protection functions.

The adoption of the NVVH followed passage of the seventeenth amendment to Hungary’s Fundamental Law, promulgated on 18 July 2026, which introduced a new Article 42, establishing the NVVH as an independent constitutional body. 

The NVVH Act broadens the scope of the earlier or Old Proposal published for public consultation (see our article on the Old Proposal here). Transactions linked to certain statutory functions of the National Bank of Hungary (MNB) will now fall outside the NVVH’s competence. Entities classified as “elevated risk” following a risk assessment will be subject to a mandatory public asset protection investigation, and the NVVH will have wider discretion in deciding whether to place an entity under public asset protection supervision.

A broader definition of “public assets” and carve-out for MNB

The Act, while narrowing its scope for assets linked to MNB’s statutory functions, simultaneously expands NVVH’s reach by clarifying that “public assets” (közvagyon) – the protection of which is the NVVH’s statutory mandate – now include assets of budgetary bodies and elements of the central budget. As a result, these assets now fall within the NVVH's competence.

Assets connected to the MNB's core functions—Article 4, Sections (1) to (9) of Act CXXXIX on the Hungarian Central Bank—are excluded from the NVVH's competence. This exemption protects the MNB's monetary-policy and financial-stability work from the NVVH scrutiny. The NVVH still has jurisdiction over any MNB-related assets that fall outside this exception.

Risk assessments and “elevated risk”

One of the NVVH’s functions remains identifying risks related to public assets – both risks affecting individual entities and those arising at a systemic level. Similar to the Old Proposal, a risk assessment is not a formal administrative procedure. It cannot establish liability or a payment obligation. Nor can it be used directly to impose sanctions. Once a risk assessment is concluded, the NVVH may do the following: 

• launch a public asset protection investigation; 
• initiate proceedings by another authority; or 
• highlight systemic risks in its annual report together with proposed legislative or organisational changes.

75% revenue threshold for “elevated risk”

Under the Act, the NVVH must qualify certain circumstances as giving rise to an "elevated risk" (kiemelt kockázat). Such a risk may be identified where, in any closed tax year within the five years preceding the risk assessment, an economic operator, together with its related undertaking, reaches at least 75% of their combined net revenue from one or more of the following sources, including any state guaranteed loans:

• public procurement or concession procedures;
• defence and security procurement procedures;
• competitive procurement procedures conducted under the contracting public authority's own internal rules;
• public-money revenue obtained by way of subsidy; and
• revenue derived from state or European Union funding.

A finding of elevated risk carries two practical consequences. First, it subjects the relevant entity to enhanced scrutiny. Second, it requires the NVVH to initiate a public asset protection investigation.

Public asset protection investigations

A public asset protection investigation is a procedure that NVVH must conduct due to risks identified during a risk assessment. Importantly, where elevated risk is established, NVVH is expressly required to launch an investigation. These investigations are intended to lay the groundwork for the following: 

• administrative proceedings to place an entity under the newly established public asset protection supervision; 
• NVVH’s exercise of its own case-initiation powers; or 
• other authorities to request initiation of proceedings.

The statutory time limit for the investigation is six months, which may be extended by an additional six months when justified. In particularly complex cases, the NVVH’s president (or a person authorised under its internal rules) may grant a second and final six-month extension, bringing the maximum duration of the investigation to 18 months. Upon expiry of that period, the investigation must be closed and may not be continued. A new investigation concerning the same subject matter may only be opened if the NVVH becomes aware of new information.

Following the conclusion of the investigation, the NVVH will prepare a summary report. The report may be made public. The NVHH can publish it on its website if the report is significant from a social, economic, or budgetary perspective. The publication of these reports can be relevant to third parties, including investors, lenders, and business partners, as they can provide useful insight into an entity's governance, financial management and reliance on public funds. These stakeholders are likely to take the report's findings into account as part of their overall assessment of the entity.

Duty to cooperate and the imposition of a fine

Cooperating with the NVVH during a public asset protection investigation is mandatory.  A person may refuse to cooperate only in a limited number of cases expressly set out in the Act. These include situations where the following may occur: 

• cooperation would incriminate the person or a relative in a criminal offence; 
• the requested information is protected by legal professional privilege or notarial confidentiality; 
• the person is bound by a confidentiality obligation relating to classified information and has not been released from it; or 
• the person’s physical or mental condition makes cooperation unreasonably burdensome or impossible.

Where a person or entity deliberately breaches its duty to cooperate – whether by failing to provide data, permit access to documents, make statements, tolerate an on-site inspection or otherwise cooperate – the NVVH will impose a fine. Crucially, the fine may be imposed only in cases of intentional non-compliance. 

Negligent conduct or inadvertent failures do not give rise to monetary sanctions under these provisions.

The NVVH will determine the amount of the fine according to the following criteria:

• natural persons: from HUF 50,000 to HUF 50 million;
• legal persons and unincorporated organisations: from HUF 500,000 to HUF 5 billion.

The fine can be imposed repeatedly if the breach persists despite a repeated request, which does not relieve the offender of the underlying cooperation duty.

These penalty levels are significant, particularly for corporate entities. Combined with the NVVH's ability to impose fines repeatedly until compliance is achieved, the sanctions framework is set to create a strong incentive for individuals and organisations to engage constructively with investigations and comply promptly with information requests.

While the public asset protection investigations do not qualify as administrative proceedings, the imposition of a procedural fine takes place within the framework of an administrative procedure. The practical consequence is that the NVVH's decision can be challenged in the Hungarian courts, providing the sanctioned party with a clear and effective judicial remedy against the authority's enforcement measures.

Public asset protection supervision

The Act introduces a new instrument: the public asset protection supervision. This allows the NVVH to intervene directly in the management and disposal of an entity's assets when necessary to safeguard public assets pending the clarification of suspected irregularities.

As part of an administrative procedure, the NVVH is empowered to place an economic entity and its related undertakings under public asset protection supervision, if: 

• available information suggests that criminal proceedings and asset recovery measures may be justified; 
• further fact-finding is required; and 
• public assets cannot otherwise be adequately protected.

The decision ordering public-asset-protection supervision, as well as the decision terminating it, must be published both in the Company Gazette (Cégközlöny) and on the NVVH’s website. Consequently, making this supervision public information will almost certainly attract the attention of stakeholders and may have reputational and commercial implications for the company even before wrongdoing has been established.

Powers of the supervisor

Public-asset-protection supervisory measures represent a significant intervention in the functions of the entity concerned.

Within the scope defined in the supervision order, and subject to the principles of necessity and proportionality, the supervisor must countersign any asset-related commitments of the organisation. Any commitment is null and void without the supervisor's countersignature. 

The supervisor may also, within the limitations set by the supervision order, take decisions in matters falling within the competence of the organisation’s decision-making body, in particular any measures necessary to maintain its operability. 

Reviewing and termination of supervision

Public asset protection supervision is not indefinite. Supervision must be reviewed at least every six months or sooner if an asset-related measure is ordered over part of the entity's assets in criminal proceedings, or if the NVVH secures those assets through another procedure. 

The supervision must be lifted when the following occurs: 

• its grounds no longer exist; 
• no further assets need protecting following such a measure or securing action; or 
• the investigation closes without leading to criminal or other judicial proceedings.

This periodic review requirement is an important safeguard since it ensures that supervision remains in place only for as long as it is necessary to protect public assets and does not become a permanent restriction on the entity's operations.

State indemnification liability

As an additional safeguard, the Hungarian State must indemnify the supervised entity or its owner for losses caused by a supervisor’s decision in the following situations: 

• a court subsequently annuls that decision; and 
• the losses resulted from the implementation of the unlawful decision.

This enhances legal certainty for both the supervised entity and its stakeholders. While public asset protection supervision significantly affects an entity's operations and governance, the Hungarian state ultimately bears financial responsibility where such interference is later found by a court to have been unjustified.

Prosecutorial powers

Where an investigation reveals a criminal offence within the NVVH’s jurisdiction, the NVVH may assume conduct of the case and exercise full prosecutorial powers, from the preliminary investigative stage through indictment and representation at trial.

Given these powers, the NVVH will also operate as a specialised prosecutorial office for all criminal matters falling within its jurisdiction.

What happens next

The Act entered into force on 29 July 2026 and the NVVH is expected to begin operations in early autumn 2026.

The new regime is particularly relevant to companies in public procurement supply chains, recipients of state or EU funding, state-owned enterprises, concession holders and their subcontractors and affiliates. Companies approaching the 75% threshold discussed above should review their revenue composition while funding recipients should consider how the NVVH's investigative powers may affect their compliance and governance.

For information and assistance in assessing your exposure to the new regime, contact your CMS client partner or the CMS experts who contributed to this article. 

For ongoing insights into Hungary's evolving legal, regulatory and tax landscape, visit our Hungary Forward hub.

The article was co-authored by Luca Pintér.