Data protection and cybersecurity laws in Hungary

Data protection

1. Local data protection laws and scope

  • Act CXII/2011 on the Right of Informational Self-Determination and the Freedom of Information (Info Act) – general rules on personal data processing (including processing for law enforcement, national security and national defence purposes, implementing the EU Law Enforcement Directive) and freedom of information - Act CXII of 2011 (njt.hu)
  • The Info Act – which was the general privacy act before the GDPR – supplements the GDPR with certain minor, mainly procedural rules and contains freedom of information provisions not regulated by the GDPR.

The main sectoral rules regulating specific areas of data protection law are the following:  

  • Act LXVI/1992 on Personal Data and Address Records of Citizens
  • Act CXIX/1995 on the Use of Name and Address Information Serving the Purposes of Research and Direct Marketing (Hungarian Direct Marketing Act) 
  • Act XLVII/1997 on Processing and Protection of Medical and Other Related Personal Data (Medical Data Act)
  • Act CXX/2001 on Capital Markets
  • Act C/2003 on Electronic Communications (E-Communications Act) – implementing the EU E-Privacy Directive
  • Act CXXXIII/2005 on Security Services and the Activities of Private Investigators (Security Services Act)
  • Act XLVIII/2008 on Advertising (Advertising Act) 
  • Act XXI/2008 on the Protection of Human Genetic Data (Human Genetic Info Act)
  • Act I/2012 on the Labour Code
  • Act CCXXXVII/2013 on Credit Institutions and Financial Enterprises
  • Act LIII/2017 on Avoiding and Battling Money Laundering and Terrorist Financing (Money Laundering Act)
  • Act CLXV/2013 on Complaints and Notifications of Public Interest (Complaints Act)
  • Act LXXXVIII/2014 on Insurance Institutions and the Insurance Business
  • NMHH Decree 4/2012. (I. 24.) on the Rules concerning Data Protection and Confidentiality in relation to Public Electronic Communications Services, Special Conditions for Data Processing and Confidentiality, Security and Integrity of Networks and Services, Processing of Traffic and Billing Data, Identification and Call Forwarding Rules – implementing the EU E-Privacy Directive. 

2. Data protection authority

National Authority for Data Protection and Freedom of Information (Nemzeti Adatvédelmi és Információszabadság Hatóság; NAIH): https://www.naih.hu/

3. Anticipated changes to local laws

A number of laws (including the Advertising Act) are expected to be further amended with regard to the GDPR at a later stage.

As regards sector-specific main derogations, please see our summary below.

Derogations concerning employment law:

  1. Data protection notices to employees. Employers should inform their employees of any restriction of their personal rights. Notification may also be made in the workplace using a customary and generally known method (e.g. in writing, or publication on intranet and email)
  2. No copies. The Labour Code clarifies that employers should take notes on information that has been requested from employees and avoid copying actual documents as possible. 
  3.  Biometric identification. Employers may use biometric identification to prevent unauthorised access to information, if such access seriously or irreversibly jeopardises the life, health or significant interests of individuals (e.g. information regarding classified data, explosives, hazardous substances, assets with a value exceeding HUF 50m or EUR 138,890).
  4. Background checks. An employer is permitted to establish exclusion or restriction criteria for a particular position and can process an applicant’s criminal data to verify his/her background. Such criteria are legitimate only if the employee's position poses a potential threat to the employer's financial interests, is privy to secrets (e.g. trade secrets) or exercises significant interests protected by law and defined by the Labour Code (e.g. safe storage of firearms, ammunition, explosives, poisonous, hazardous or biological substances and nuclear materials).

Derogations concerning CCTV and entry systems:

Companies using entry systems, security cameras or security-related sensors must document in their data protection notices the legitimate interest for using these systems and include detailed specifications of the purpose of the processing (e.g. protection of classified information, storage of dangerous substances). If access has been made to data or recordings stored by such system, the company must take minutes on the specific circumstances of each case.

Derogations concerning the operation of condominiums:

CCTV monitoring in the territory of condominiums. Condominium operators must inform people entering and staying in a building of any CCTV use and include the data protection notice and contact details of the operator. When providing copies of the recordings, operators must identify the recorded image, the name of the person authorising the copies, and the reason and time for viewing the data.

Derogations concerning the health sector:

  1. If additional copies of health data (i.e. after the first copy of the same data request) are required, a fee can be levied by the health organisation reflecting the costs of processing. The first copy is however free of charge.
  2. Genetic data. Companies may transfer only anonymised, encoded or pseudonymous genetic samples or data to a third country for human genetic testing. They should also use the appropriate safeguards required by the GDPR (e.g. BCRs, EC Model Clauses, etc). It is not permitted to transfer the coding key. The same applies for importing genetic samples or data. The local health administration should be notified of the transfer of genetic samples and data to a third country and the transfer should be made in a manner where personal identification is impossible.
  3. Deceased persons’ data. A number of laws in Hungary expand data protection to deceased persons’ data in certain aspects, which generally would not be covered by the GDPR. This affects health documentation and insurance-related data of deceased persons. In addition, under Hungarian law, the person designated by the deceased person or his/her close relatives may also exercise data protection rights after five years of the death of such person.

Derogations concerning the financial sector:

The service providers subject to AML requirements may copy personal documents specified by law for the following purposes: preventing and combatting money laundering and terrorist financing, fulfilment of obligations under the Money Laundering Act, fulfilment of customer identification obligations and effective supervision of client-monitoring activities. Copies cannot include personal identification numbers.

Derogations concerning trading activities:

When a customer makes a complaint or suggestion in a merchant's customer comment book (vásárlók könyve), the merchant must remove the page containing the complaint or suggestion, keep it in a secure place and hand it over to the authority if requested.

4. Sanctions & non-compliance

Administrative sanctions:

The administrative sanctions are set forth in the GDPR.

Criminal sanctions:

The Hungarian Criminal Code regulates and sanctions the misuse of personal data, which is punishable with one year of imprisonment - or two years, in case special categories of data were involved.

Others: 

Based on the GDPR and in compliance with Hungarian Civil Code, the data subject may claim compensation of its damages suffered as a result of processing that infringed the GDPR.

5. Registration / notification / authorisation

Data controllers shall no longer had to register their data processing activities with NAIH as of 25 May 2018 with regard to the fact that each data controller and data processor must record its data processing activities internally in line with Article 30 of the GDPR. In addition to that, the notification and registration obligations prescribed by the GDPR (e.g. concerning data protection officers or data breaches) apply in Hungary as of 25 May 2018.

6. Main obligations and processing requirements

There are no derogations from the GDPR. 

As regards data processing for crime-fighting, national security and national defence purposes, the provisions of the Info Act apply. These are similar in many aspects to the GDPR requirements (e.g. data subject rights, data breach management, data protection impact assessment, etc.).

7. Data subject rights

There are no derogations from the GDPR.

The Info Act provides that individuals can seek effective judicial remedy at the court when their data protection rights are infringed and without prejudice to any available administrative or non-judicial remedy (e.g. complaint to NAIH). In Hungary, the competent court is the tribunal (törvényszék) of the domicile or habitual residence of the claimant. In addition to the payment of the individual’s direct and indirect damages, the court can also impose a general compensation fee for the infringement of the individual’s right to data protection as personality right (sérelemdíj). The court can also publish its judgment with the identification of the data controller or the data processor if the infringement is affecting a large scale of individuals, the infringer is carrying out public tasks, or the gravity of the infringement requires the publication. The Info Act authorises NAIH to join any litigation to facilitate the winning of an individual.

8. Processing by third parties

There are no derogations from the GDPR.

9. Transfers out of country

There are no derogations from the GDPR.

10. Data Protection Officer

There are no derogations from the GDPR. Data controllers and data processors shall publish the contact details of their data protection officers and communicate them to NAIH through the Data Protection Officer Reporting System

11. Security

There are no derogations from the GDPR.

12. Breach notification

The provisions of the GDPR apply. Data controllers shall notify personal data breaches to NAIH through the Personal Data Breach Reporting System. The reporting form is also available on NAIH’s website in paper form, if a company wants to report the breach on paper.

Bearing in mind that the language of the administrative procedures in Hungary is Hungarian, organisations shall report data breaches in Hungarian language to NAIH.

13. Direct marketing

Direct marketing    Before 25 May 2018, Hungary clearly operated an “opt-in” regime for direct marketing communications. Currently, the rules of the GDPR apply, meaning that in certain cases, the data controller may send direct marketing messages on an “opt-out” basis. However, the Advertising Act has still not been amended to guarantee harmonisation with the GDPR, causing uncertainty in this matter.

With regard to the above, under the current rules of the Advertising Act, data controllers may send advertisements to private individual end-users in Hungary by email or similar electronic channels only with the express prior consent of the addressee.

Consents for individual marketing activities must contain the name, place and date of birth (if the marketing can be targeted only for people above a certain age), and the list of the consumer’s personal data which are processed in relation to the marketing.

Consent must also state that it is provided voluntarily, on the basis of adequate information provided to the consumer.

In all cases, end-users must be expressly informed in all individual marketing communications of the opportunity to freely opt-out of the communications and be given the relevant contact details (e.g. postal and email address) where they can do so. This statement is usually inserted in the footer of marketing communications.

If the consent is provided in a contract or in general terms, it must be provided separately from the main text – e.g. via the acceptance of a separate consent box. It cannot be a precondition to the contracting or receipt of a service, such as an online shop.

If the advertiser offers added value, provided that the addressee consents to receiving direct marketing messages, no separate consent box may be needed – e.g. if the addressee is given the opportunity to participate in a game or use free email services.

The sending of a direct mail message is lawful and can be based on the legitimate interest of the sender in general if the private individual addressee is an employee of a legal entity, the advertiser obtained the contact details lawfully (e.g. via the company's website or public sources), and the advertisement is targeted to a company (i.e. B2B marketing messages).

Direct marketing consents for benefits. According to NAIH, when organisations provide some benefit for subscribing to a newsletter, they must assess on a case-by-case basis how such benefit influences the free nature of the consent. In particular, it is important to examine whether the denial or withdrawal of consent (e.g. opt-out) causes any disadvantage for the individual. The provision of a service or a benefit shall not be conditional on a consent to data processing for additional purposes (e.g. direct marketing). Such practice is allowed only if the benefit is inseparable from the newsletter, e.g. the newsletter contains an exclusive content or offer.

14. Cookies and adtech

The storing of information, or the gaining of access to information already stored in the electronic communications terminal equipment of a subscriber or user is only allowed on condition that the subscriber or user concerned has given his/her consent and has been provided with clear and comprehensive information on the use of cookies, including information on the purpose of the data processing. In case of cookies strictly necessary for the operation of the website (especially concerning the application of session cookies), a data controller operating a website may process personal data of subscribers or users for technical and operation purposes based on its legitimate interest without the need of any consent.

In any other cases the legal basis of using cookies is consent. The above rules concerning requiring a consent further do not prevent any technical storage or access for the sole purpose of carrying out the transfer of a communication over an electronic communications network, or as strictly necessary in order to provide an information society service explicitly requested by the subscriber or user.

Cookie notices must contain:
  • The cookie’s name, type, function, purpose, necessity and lifespan.
  • The data the cookie can access
  • Third parties for whom the cookie collects data and the purpose of such collection, as well as a link on how to find the cookie management menu and the functions in the most commonly used browsers (Mozilla, Firefox, Google Chrome, Internet Explorer).
Cookies and GDPR

In line with NAIH’s practice concerning data processing with regard to cookie management under the GDPR, we highlight the following:

  1. The website operator may process the relevant personal data on the basis of its legitimate interests, without the consent from the users, when the placement of the cookies or any server-side IP address logging solely takes place for the purpose of the operation of the website, in order to ensure its operability or its essential functions, as well as the security of the computer system. The consent of the user for the cookie placement may be required when it is possible to use the webpage without the cookie.
  2. As regards the usage of cookies for statistical purposes (e.g. collecting technical data which are not necessary for the ongoing operation or required only for the future development of a service or for visitor counting, etc.), as well as for marketing purposes (following the user linked to advertisements, etc.), the website operator may rely on its legitimate interests for the data processing only in exceptional cases in accordance with the GDPR. The website operator may rely on legitimate interest, for example, where there is a relevant and appropriate relationship between the user and the operator (e.g. the user is an existing customer). In case of third-party cookies, usually there is no such relationship.

Website operators must differentiate between first-party cookies applied for statistical or development purposes and marketing cookies (which are also third-party cookies many times in practice), bearing in mind that the user may want to consent to one of the cookies, but does not intend to provide consent to the other one. Bundling such consents may lead to unlawful data processing.

15. Risk scale

Moderate

Cybersecurity

1. Local cybersecurity laws and scope

Electronic information security in the public sector:
  • Act L/2013 on the Electronic Information Security of National and Self-Governmental Organisations (Electronic Information Security Act)
  • Government Decree 187/2015 (VII. 13.) on the Responsibilities and Powers of the Authorities Responsible for the Security Oversight of Electronic Information Systems and the Information Security Supervisor, as well as the Definition of Closed Electronic Information Systems.
Protection of critical infrastructures:
  • NIS Directive is implemented by Act CLXVI/2012 on the Identification, Designation and Protection of Critical Systems and Infrastructure (Critical Infrastructures Act).
  • Government Decree 65/2013 (III. 8.) on the Execution of the Critical Infrastructures Act (Critical Infrastructures Government Decree)
  • Sectoral governmental decrees appointing the competent authorities, which can identify and appoint national and European critical infrastructures (e.g. Government Decree 249/2017. (IX. 5.) on the Identification, Designation and Protection of Critical Systems and Infrastructure in the Information Communications Sector)
Electronic information security in the private sector:
  • Act CVIII/2001 on Certain Matters concerning Electronic Commerce and Information Society Services (E-Commerce Act)
  • Government Decree 270/2018 (XII. 20.) on Monitoring Electronic Information Security of Information Society Services and Procedures concerning Security Incidents (Information Security Decree) -
  • Government Decree 271/2018 (XII. 20.) on the Roles and Responsibilities of Event Management Centres, as well as on the Rules for Handling and Investigating Security Incidents and Conducting Vulnerability Analysis (Security Incident Decree)

2. Anticipated changes to local laws

A proposal for the NIS2 directive has been published by the Commission on 16 December 2020. No changes are expected on local level before adoption of NIS2 on EU level.

3. Application 

Main requirements: 
  • The Electronic Information Security Act sets out security obligations for national and self-governmental organisations, for entities performing data processing for those organisations, as well as for European and national critical infrastructure operators and for data processors of national registers (e.g. the national tax or social security register).
  • The Critical Infrastructures Act identifies operators of essential services (OESs), national and European system components with key sectoral importance and sets out designation rules and safety obligations.
  • The Government Decree 270/2018 specifies obligations for guaranteeing electronic information security of digital service providers (including online marketplaces, online search engines and cloud-based IT service providers) (DSPs) and intermediary service providers (including access providers, cache providers, host providers, search engines and application service providers) (ISPs).
  • The Government Decree 271/2018 contains provisions on the tasks and competence of computer security incident response teams, on managing and mechanical testing of security incidents and on conducting vulnerability testing. The Government Decree covers both DSPs and ISPs, as well as OESs and operators of critical infrastructure. 
  • The E-Commerce Act sets out obligations for electronic services providers, including security obligations and the protection of consumer rights by technical means. The E-Commerce Act also sets out the main responsibilities of ISPs.
Obligation to designate a representative: 

The NIS Directive and Hungarian laws implementing the NIS Directive also apply to companies based outside the EU whose services are available within the EU. These companies are obliged to designate an EU-based representative to act on their behalf in ensuring NIS Directive compliance.

Cybersecurity registration obligations and designation of entities in the public sector:

Operators of critical infrastructures: an entity becomes an operator of critical infrastructure if the competent authority (which is different from sector to sector) designates the entity as such. The list of such critical infrastructure operators has not been made public for security reasons. However, it is certain that state-owned power plants, power transmission companies, system operation companies, major district heating works and other such entities fall into this category.

OESs: an operator of critical infrastructure is also designated as an operator of an essential service by the authority in its decision designating the entity as a critical infrastructure operator if:

  • Its corresponding sector or subsector corresponds with the one specified by the NIS Directive (according to an annex to the Critical Infrastructures Act). Operators of services in the energy sector (e.g. energy transmission and distribution system operators) and operators of most transport, health and finance services (e.g. air operators, traffic management control operators, hospitals and private clinics and credit institutions), as well as operators of information communications (internet infrastructure and internet access services) and water supply services (drinking water supply and distribution operators) may be designated as OESs
  • Its service depends on network and information systems; and
  • A security incident affecting the service would have a significant disruptive effect on the safe provision of such a service.

In addition an operator of non-critical infrastructure that fulfils the above criteria may also be an OES based on the identification process carried out by a competent authority.

DSPs: in line with the NIS Directive, DSPs must register at the Special Service managing the registry of DSPs in Hungary. It is noted that the Special Service for National Security’s practice considers online retailers as “online marketplaces”, a sub-category of DSPs (e.g. an online shop selling technical components or retail products), which are also required to register.

4. Authority

  • The Special Service for National Security (Nemzetbiztonsági Szakszolgálat) (Kezdőlap - Nemzetbiztonsági Szakszolgálat (gov.hu), as the National Competent Authority under the NIS Directive, oversees and manages the register of DSPs and acts as the event management centre (computer security incident response team), which manages security incidents with significant impact on the services of DSPs and ISPs. The Special Service also has broad controlling rights under the Security Incident Decree, which states that organisations affected by a security incident must cooperate with the Special Service.
  • National Disaster Management Authority (Országos Katasztrófavédelmi Főigazgatóság) (BM Országos Katasztrófavédelmi Főigazgatóság (katasztrofavedelem.hu)) is a general authority suggesting appointment of OES and also oversees the electronic information systems of national and European critical infrastructure with the exception of state and municipal bodies and assists the sectoral authorities during the designation procedure of OESs. Sectoral rules specify the entities acting during the designation of the OESs.
  • Authorities designating entities as national critical infrastructure operators and deciding on their registration as OESs. Examples include NMHH overseeing OESs providing information communication services, while the minister responsible for the health sector oversees health service providers and the minister responsible for finance, capital and insurance market regulation oversees financial services

5. Key obligations 

Operators of critical infrastructures: the operators of critical infrastructures and certain public entities specified by the Information Security Act should report to the Special Service – without delay – any security incident in their electronic information systems.

OESs: OESs are required to take appropriate and proportionate technical and organisational measures to protect their network and information systems and to assure a level of protection against the potential risks (including cyberattacks, system downtime or other incidents leading to disruptions of essential services). Appropriate measures to respond to such risks include logical, physical and administrative measures to eliminate or diminish their effects, such as appropriate software solutions, mechanical equipment and measures and internal rules assuring security.

OESs should report security incidents that have a significant effect on the continuity of their essential services to the competent national CSIRT (the Special Service in Hungary) without unreasonable delay. The report should specify the number of users affected by the disruption of the essential service, the duration of the security incident and the geographical extent of the territory affected by the incident.

In addition to the above, the annexes of the Critical Infrastructure Act specify other infrastructure in other key sectors or subsectors (including agriculture, public safety and home defence), which may be designated as critical infrastructure.

It is noted that operators of national and certain European infrastructure and OES are designated by the competent authorities, however companies that may fall under the category “OES” must prepare an identification report and submit it to the government body competent for designating OES in the relevant sector. The report helps the competent authority to assess the necessity of designating the given operator as operator of national or European infrastructure or OES.

DSPs: besides registration, DPSs are also required to implement minimum security measures, including establishing a risk management methodology and assigning security roles within their organisation, as well as arranging appropriate training and internal policies, third party contract management, and physical and environmental security (for further information, please see the relevant ENISA guideline: https://www.enisa.europa.eu/publications/minimum-security-measures-for-digital-service-providers/).

ISPs: ISPs have limited liability specified by the E-Commerce Act. Like DSPs, ISPs must report – without delay – any security incident in their electronic information systems to the Special Service.

6. Sanctions & non-compliance 

Administrative sanctions:

The administrative sanctions depend on the sector and type of operator.

In connection with OES and operators of critical infrastructure, the maximum fine that can be imposed in case of non-compliance is HUF 10m (EUR 27,800).

In connection with non-compliance of state organisations and their data processors with cybersecurity requirements, the Special Service for National Security may demand the relevant organisation to comply with applicable law, perform certain acts or implement measures to remedy the non-compliance. The competent authority may request immediate action, as well as the cooperation and provision of data, and may also initiate disciplinary actions before the employer.  The Special Service for National Security may impose maximum HUF 5m (EUR 13,900) administrative fine. 

Criminal sanctions:

The Hungarian Criminal Act punishes breach of information system or data. The unlawful access to information systems is punishable with imprisonment up to two years, the unlawful hindering of information systems or unlawful deletion or modification of data with imprisonment up to three years. In aggravated cases the above acts may be punished with imprisonment up to five or eight years.

The Hungarian Criminal Act also punishes the compromising or defrauding the integrity of the computer protection system or device with imprisonment up to two years.

7. Is there a national computer emergency response team (CERT) or computer security incident response team (CSIRT)? 

Yes, the Special Service.

8. National cybersecurity incident management structure

Yes, incidents must be reported to the Special Service.

9. Other cybersecurity initiatives 

The Commission published a proposal for the NIS2 directive was on 16 December 2020. No changes are expected at the local level before the adoption of NIS2 at the EU level.

Portrait of Dóra Petrányi
Dóra Petrányi
Partner
Budapest