The European Union on Wednesday urged Hungary to step back on its new law on foreign-funded non-governmental organizations.
The European Commission said in a statement that the Hungarian government had one month to take the necessary measures to comply with the EU's opinion on the law.
"If Hungary fails to reply satisfactorily to the reasoned opinion, then the Commission may refer the case to the Court of Justice of the EU," the statement said.
The Hungarian law, which was adopted on June 13, introduced new obligations for non-governmental organizations receiving annual foreign funding above nearly €24,000 ($28,000) to register and label themselves as "organizations supported from abroad".
Such NGOs are also obligated to report to Hungarian authorities specific information about any funding received from abroad, and could "face sanctions if they fail to comply with the new registration, reporting and transparency obligations".
The Commission's reasoned opinion issued on Wednesday is a follow-up to the July 14 letter of formal notice sent to Hungary, which was replied a month later.
"Having carefully analysed the explanations put forward by Hungary, the European Commission concludes that its serious concerns have not been addressed," the statement said.
The Commission had decided to start legal proceedings against Hungary due to serious concerns regarding the draft law's compatibility with EU law.
It said the NGO Law included provisions which "indirectly discriminate and disproportionately restrict donations from abroad to civil society organisations," and Hungary failed to fulfil its obligations under the EU Treaties provisions on the free movement of capital.
The Commission also concluded that the law "interferes unduly with fundamental rights as enshrined in the Charter of Fundamental Rights of the European Union, in particular the right to freedom of association".
"The new law could prevent NGOs from raising funds and would restrict their ability to carry out their work," it said.
