The European Union has given Hungary a two-month deadline to change a law pushed through parliament by right-wing Hungarian Prime Minister Viktor Orban's government that forces nongovernmental organizations (NGOs) to disclose foreign donors.
The European Commission, the bloc's executive arm, sent a letter to Budapest on February 18 saying it had two months to implement changes after the Court of Justice of the European Union (CJEU) ruled last year that the 2017 law "introduced discriminatory and unjustified restrictions" in breach of fundamental rights, including on personal data protection and freedom of association.
The law, nominally meant to increase transparency of NGO finances and combat money laundering, requires NGOs that receive more than 7.2 million Hungarian forints ($27,000) of foreign funding annually to register as such and make the distinction public.
"The commission considers that Hungary has not taken the necessary measures to comply with the judgment, despite repeated calls from the commission to do so as a matter of urgency. As a result, the commission is asking Hungary today by letter of formal notice to take and implement all required measures to remedy the situation. Hungary has two months to reply to the concerns raised by the Commission," a notice on the EC's website said.
"The court case was part of an infringement procedure through which the commission takes on EU countries violating the bloc's laws. If Budapest fails to abide by the ruling, the commission could ask the CJEU to impose financial fines," it added.
Critics say the measure targeted Hungarian-born U.S. billionaire philanthropist George Soros, a harsh critic of Orban.
Orban has accused NGOs funded by Soros of political meddling. Soros has rejected the campaign against him as “distortions and lies” meant to create a false external enemy to distract Hungarians.
Because it "establishes a difference in treatment between national and cross-border movements of capital," the legislation amounts to a restriction on the free movement of capital, the CJEU said in its 2020 ruling, adding that it creates "a climate of mistrust towards the associations and foundations" targeted, and may dissuade donors.
Hungary had argued the law enhanced transparency, holding that the restrictions apply indiscriminately and not only to organizations likely to have a significant influence on public debate.
The EU has taken Hungary to court in several cases, accusing the government of muzzling the media and academics.