The Court of Justice of the European Union (CJEU) ruled in June 2020 that Hungarian legislation requiring NGOs to make full disclosure of foreign funding over a certain threshold violates EU rules on the free movement of capital as well as the fundamental rights to protection of personal data and freedom of association enshrined in the EU Charter of Fundamental Rights.

The authors of the bill submitted on Tuesday said the proposed legislation serves to comply with the CJEU ruling, adding that the ruling "confirmed that ensuring the transparency of support provided to organizations capable of significantly influencing public debate can serve the overriding public interest".

The bill, while annulling the old legislation, "seeks to legislate new rules that conform with European Union law", the authors said in the bill's justification. It would mandate the State Audit Office (ÁSZ) to publish an annual report on associations and foundations with balance sheets over HUF 20 million in a manner to be determined in separate legislation.

The proposal would apply exceptions for inclusion in the annual report identical to exceptions in the annulled legislation on NGO reporting.

The legislation would come into force on July 1, 2021.