Tax Alert

Parliament has adopted a draft proposal on the General Rules of Entry and Residence of Third Country Nationals (TCNs).

The Act is yet to be announced publicly, but is expected to enter into force on 1 January 2024, long before the initially communicated date of 1 September 2024. It will replace the provisions of Act II of 2007 on the entry and residence of TCNs. Since the changes will affect both TCNs living in Hungary and employers wishing to hire them, we highly recommended preparing for the changes ahead of time.

Residence permits that are issued based on the new Act will differ in both name and content from the currently used types. According to the transitional provision of the National Directorate General for Aliens Policing (the immigration authority), applications will be accepted on a rather limited basis between 1 January 2024 and 29 February 2024.

The main procedural deadlines and relevant information are as follows:

• Between 1 January 2024 and 29 February 2024, applications for residence permits, permanent residence permits or residence cards cannot be submitted to the immigration authority, with the exception of residence permits and residence card applications based on national interest.
• The validity of residence permits and permanent residence permits expiring between 1 January 2024 and 29 February 2024 will be extended until 30 April 2024.
• For applications submitted before 1 January 2024, the procedure will be suspended between 1 January 2024 and 29 February 2024.
• Visas and permits—including temporary residence permits—issued before the aforementioned period will be valid according to the expiry date of the given document.

These deadlines are particularly unfavorable for TCN individuals who already have an application pending, or who wish to find employment or change their employer in the near future.

The new law largely redefines the current immigration legislation by categorizing residence permits according to new criteria, such as nationality, qualifications or the type of desired job position. It introduces a new conceptual system, classifying residence permits according to short, long-term and permanent residence status.

The regulation introduces a guest worker residence permit, which, in line with its name, entitles foreigners to a limited stay of up to 3 years. However, it excludes their eligibility for stays of longer durations, as well as the possibility of their family members joining them.

It offers investment-based residence if the investment or donation is made in the interest of the national interest. In this case, the third-country national may be entitled to a so-called investor visa or an investor’s residence permit.

The Act will impose greater responsibility on the employer in certain cases in that, once the employment is terminated, the employer will be obliged to support the third-country national in his efforts to leave Hungary.

The law does not leave out highly qualified persons, either. Such individuals will be able to stay in Hungary with the newly introduced Hungarian Card, Corporate Card or the already familiar EU Blue Card.

Overall, the Act introduces stricter rules on the residence and employment of TCNs in Hungary. This will pose new challenges in the coming months for both aspirants as well as the authorities.

In light of the changes described above, we ask for our clients’ patience during the transitional period. KPMG's Immigration team will continue to provide prompt and up-to-date immigration services in line with the legislative environment to its TCNs

Once the detailed rules have been published, we will of course provide more information and assistance to help you identify the most suitable permits you or your employees can apply for.