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EU criticizes Hungarian law restricting company moves

Issues

Advocate General at the European Court of Justice Poiares Maduro criticized a Hungarian law requiring companies to have their operational headquarters in the same country in which they are incorporated.

Maduro said that a company registered in Hungary should be allowed to run its operations from another European Union state.

Maduro's announcement represents a preliminary opinion and has no legal authority.

The EU Court of Justice said in a related press release that “Hungarian regulations are less fair with regard to cross-border situations than toward strictly domestic issues in that they only permit Hungarian companies to move their headquarters inside the country.”

The statements of Maduro and the EU court pertain to a case involving Cartesio, a limited-partnership company registered in Hungary, that was barred by a local Hungarian court from moving its headquarters to Italy while remaining incorporated in Hungary.

The outcome of the Cartesio case is expected to clarify issues related to the right of companies to choose the country in which they want to be incorporated, an issue that can have tax and other legal implications.

Previous rulings by Europe's highest court on this issue have been contradictory. (MTI – Econews)

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