The European Commission on Thursday launched legal action against Hungary for its new law regulating foreign-funded non-governmental organizations (NGOs).
Under Hungary's controversial law that took effect last month, NGOs receiving more than 24,000 euros (26,800 dollars) of direct or indirect funding from abroad will have to register as "civic organizations funded from abroad."
Critics have condemned it as an instrument to stifle dissent.
The EU concluded that the law was not compliant with the bloc's rules on the right to freedom of association, the free movement of capital and the right to protection of private life and of personal data.
"Civil society is the very fabric of our democratic societies and therefore should not be unduly restricted in its work," said Frans Timmermans, the commission's vice president.
The Hungarian authorities have one month to respond to the EU's letter of formal notice.
