Hungary notified last 30/06/2021 a draft Government Decree on measures to be taken to relaunch the economy in relation to the export of raw materials and products of strategic importance for security of supply in the construction sector

Notification Number: 2021/410/HU (Hungary)

Please read the Construction Products Europe contribution on this topic on the TRIS website together with the contributions from other stakeholders. For your convenience our comments are also available below:

"The industry is extremely concerned by measures taken by the Hungarian Government in the business of construction products. Indeed, the legislative package adopted by the Hungarian Government gravely distorts trade in the internal market and harms fair competition in our field of manufacturing, without any appropriate justification. Our industry believes there is ample legal basis to justify the urgent intervention of the European Commission, thereby preventing negative economic impact, whilst safeguarding the functioning of the internal market. 

On 8th July 2021, following alleged shortages and increasing prices of building materials in Hungary, the Hungarian Government adopted legislative measures that de facto regulate export of certain construction products. Manufacturers must now notify exports to the Government, which has given itself the power to prohibit such exports within 10 days and to buy the building materials at a market price which it deems fair. We must also draw the attention of the European Commission to the fact that the Hungarian Government has indicated that a full export ban may be implemented as early as October 2021.

In addition to that the Hungarian Government also introduced pricing restrictions in the form of a new levy (an additional “mining fee”) of no less than 90% over any sales amount charged in excess of unit prices which have been fixed by the Hungarian government.  The levy applies exclusively to a limited number of larger manufacturers of building materials, while smaller manufacturers and non-manufacturing importers/traders remain unaffected.  This constitutes violations of the freedom of establishment and capital as enshrined in Articles 49, 54 and 63(1) TFEU. 

The excessive sales levy also qualifies as a disproportionate infringement of property rights, as it considerably exceeds the tax rate applied to all other revenues.  This results in de facto appropriation in contravention of Article 17 of the Charter of Fundamental Rights and the protection of property principle in Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms.

The legislative package infringes Articles 35, 49, 54 and 63(1) of the Treaty on the Functioning of the European Union, Article 17 of the Charter of Fundamental Rights and Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms. On a procedural level, it is understood that the Hungarian Government has only provided a partial and incomplete notification to the European Commission, whilst these Decrees are already in application. These should have all been notified to the Commission and should not have been put into effect until the Commission would have reviewed and adopted a formal decision as foreseen by Directive (EU) 2015/1535.  

We therefore urge the European Commission to act and to restore the functioning of the internal market."