CJEU: Hungary’s restrictions on the financing of civil organisations from abroad contrary to EU law

On 18 June 2020, the Grand Chamber of the Court of Justice of the European Union delivered its judgment in Case C-78/18 Commission v Hungary, concerning Hungary’s restrictions on the financing of civil society organisations from abroad.

The case concerns the Hungarian Government’s adoption of a law seeking to ensure for the transparency of financial donations to civil organisations. The Transparency Law requires civil society organisations to, inter alia, register with Hungarian Courts that they are in receipt of support from donors from other Member States, whether directly or indirectly, when they exceed a set threshold. The European Commission argued that such restrictions infringed Article 63 TFEU and Articles 7, 8 and 12 of the Charter. 

The Grand Chamber observed that transactions fall within the scope of the concept of free movement of capital, and is a restrictive measure of a discriminatory nature due to its different treatment of domestic and cross-border movements of capital. It added that the targeting of associations and foundations receiving support from third countries may contribute to the creation of a climate of distrust towards said associations. Moreover, it is unclear how the objective of transparency necessitates the imposition of such measures which apply indiscriminately. The Grand Chamber held that Hungary had not submitted convincing evidence that these measures were necessary to prevent a threat to public policy or security, and therefore concluded that the restrictions were not justified.

Furthermore, the Grand Chamber observed in respect of compatibility with the Charter, inter alia, that the Transparency Law limited the right to freedom of association, provided for the disclosure of personal data, and could not be justified as an objective of general interest. Therefore, Hungary has introduced discriminatory and unjustified restrictions on foreign donations to civil society organisations, in breach of its obligations under Article 63 TFEU and Articles 7, 8 and 12 of the Charter.

Photo: triin, May 2007, Flickr (CC)

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