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The Electronic Communication Platform for Business Entities is Now Operational

As of 1 January 2018, Hungary’s new communication platform is now in use. It is a concept similar to the electronic communication platform that has been widely available to private individuals for some time. The purpose of both platforms is to enable users to communicate efficiently with the central and local governments online. While private individuals are free to choose whether to use the electronic communication, businesses must act via the new platform. As of the beginning of the year, the electronic communication platform is the only route to reach out to authorities and government agencies and vice versa; the government will communicate with the business entities exclusively through this electronic platform. Each business entity must specify an email address in its corporate data.

Which Business Entities Are Affected?

The Act no. CCXXII of 2015, commonly referenced as the E-administration Law, defines “business entity” as: “The business entity resident in Hungary as determined in the Civil Procedure Code, provided, that for the purpose of this Act, every entity pursuing economic activity within the country shall be relevant regardless whether they bear legal personality or not.”

Only businesses “resident” in Hungary will be affected by the new law. Businesses registered in Hungary only for the purposes of the administration of value added tax (AFA) are not affected. Sole practitioner lawyers are also not affected. The electronic communication platform for private individuals shall be available for the private entrepreneurs.

The deadline to register as a user of the new platform expired on August 31, 2017, as has the grace period granted through the end of the year. From the beginning of this year, businesses that missed the registration period may be subject to legal sanctions. It is, therefore, highly recommended that if you have not already registered, that you do so as soon as possible.

How Do I Register?

First, the business entity must designate an electronic mailbox that they intend to use to for the platform. This mailbox is entered into the system through a two-stage registration, and is finally added to the commercial registry.

Businesses with significant e-mail traffic are advised to use a standalone mailbox to receive communications through the new electronic platform, to ensure that mail traffic through the platform does not affect any other incoming mail.

A more complex process is the verification of the representative individual authorized to use the electronic communication on behalf of the business entity. The representative, by law, as well as those authorized by a power attorney, shall be entitled to act in the registration of the business. A power of attorney for this purpose is appropriate if it is incorporated in a notarial deed or a private document having full evidentiary effect – and the latter must be attested by two witnesses.

There are three options for representatives to complete their individual verification. They can use the electronic communication platform for private individuals, their own electronic personal identification card or a partially encoded telephone. Should none of the above three options be available to the representative, they can attend a government administrative bureau and register to use the electronic communication platform for private individuals.

The online registration portal can only be accessed by a registered representative (e.g., a managing director of a limited liability company). Those representatives holding powers of attorney must first register the hard copy of their authorization by submitting a form and the document granting them the power.

After the representative has verified their identity they must accept the general terms and conditions of the new electronic communication platform and enter the tax identification number of the business.

The communication platform is designed so that a business can appoint an administrator to act on its behalf. Should an administrator be required, this individual’s personal data must also be included in the registration. Applicants must not forget to check the box to confirm completion of the first phase of registration (different to the commercial registry). This will  complete the final registration step and subsequently allow a completion certificate to be downloaded.

This article should have provided sufficient guidance to allow an individual to register a business for the new electronic communication platform. Look out for future posts that will cover detailed provisions on individual authorizations for usage and any relevant applicable segments.

© Copyright 2018 Squire Patton Boggs (US) LLP

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About this Author

Akos Mester, Partner
Partner

Ákos Mester has been in private practice for two decades and focuses on transactional matters including mergers and acquisitions, joint ventures, project finance and capital market deals. In the commercial law area he works on complex contractual arrangements. He frequently counsels on various investments, real estate and private equity matters. He also drafts and negotiates real estate purchase and lease agreements, as well as technology transfer agreements. Ákos’ regulatory experience centers on banking and capital markets.

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