Foreign direct investment (FDI) screening is an essential issue for cross-border M&A, joint ventures, restructurings and financing arrangements. What was once a niche regulatory topic is now a decisive factor in transaction timing, risk allocation and, in some cases, deal feasibility itself.
For international investors subject to Hungary’s FDI screening regime according to the provisions Act L of 2025, whether entering the market or expanding an existing presence, a clear understanding of its practical implications has become essential rather than optional.
- Hungarian FDI regime in a nutshell
Hungary operates a sector-based FDI screening system aimed at protecting national security and public order. While the policy objective is familiar across the EU, the scope and practical application of the Hungarian regime are notably broad.
Key features that frequently surprise foreign investors include:
- EU investors are not automatically exempt from screening;
- Low shareholding thresholds may trigger notification obligations;
- The authority enjoys significant discretion in its substantive assessment.
From a deal perspective, sometimes the lack of clear, transaction-specific precedents makes outcome prediction challenging—particularly in sensitive sectors.
- FDI screening trigger points
In practice, FDI screening risks typically arise in the following scenarios:
- the target operates in a strategic or sensitive sector (i.e. energy, utilities, telecoms, defence-related activities, data processing, critical infrastructure);
- A foreign investor acquires direct or indirect ownership, including also through group of companies;
- The transaction involves a minority stake, but with certain control rights;
- An internal group restructuring results in a change of control chain involving a foreign entity.
Importantly, the FDI notification obligation applies once the total value of the investment into strategic reaches HUF 350,000,000 (approximately EUR 900,000).
Beyond its substantive impact, FDI screening represents primarily a timing risk from an M&A structuring perspective. FDI approval is typically a condition precedent, yet statutory review periods and potential extensions are not always easy to reconcile with tight deal timetables or financing commitments.
- Recent amendments to the provisions
From 17 December 2025, FDI screening will no longer apply in the following cases:
- Financing provided for indispensable infrastructure, equipment, or assets of a strategic company that is used as security in connection with bank financing;
- Group-level carve-outs of strategic companies.
In all other cases, transactions involving a strategic company will trigger the FDI filing obligation, including:
- Transfers of ownership interests, in whole or in part, whether for consideration or free of charge, including contributions in kind;
- Capital increases;
- Corporate transformations, mergers, and demergers;
- Bond issues that are convertible, exchangeable, or carry subscription rights;
- Creation of usufruct rights over shares or quotas.
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FDI screening in Hungary is far from a mere box-ticking exercise. Failure to notify—or completing a transaction before clearance—can have serious consequences. For this reason, deal professionals treat FDI matters as an early-stage workstream, rather than a post-signing compliance exercise.
For further information, kindly contact KPLLC’s experts who contributed to this article.
By Mate Buzassy and Gabor Gordan, Senior Attorneys-at-law, Kertesz & Partners
