Key data
| Regulation | Commission Decision (EU) 2026/1701 |
|---|---|
| Publication | July 13, 2026 |
| Entry into force | July 10, 2026 |
| Affected parties | Entities and companies managing European funds in Hungary; EU institutions; Spanish companies with joint projects in Hungary financed with EU funds |
| Category | European Regulation |
| Year | 2026 |
| Competent body | European Public Prosecutor's Office (EPPO) |
| Official reference | OJ:L_202601701 |
If your company manages or participates in projects co-financed with European funds in Hungary, the control framework has just changed substantially. The Commission Decision 2026/1701, published on July 13, 2026, formalizes Hungary's incorporation into the enhanced cooperation that gave rise to the European Public Prosecutor's Office (EPPO). Entry into force is retroactive to July 10, 2026.
This is not a minor bureaucratic change. Hungary has experienced tensions with the EU for years precisely over the use of European funds. The EPPO has competence to investigate and bring to court crimes against the financial interests of the EU, and can now do so directly in Hungarian territory, with cross-border capacity.
What does this regulation establish?
Decision 2026/1701 formally confirms that Hungary is joining the enhanced cooperation that created the EPPO, the independent EU body specialized in investigating and prosecuting crimes against European financial interests. Crimes under its competence include:
- Fraud in EU structural and cohesion funds
- Corruption linked to the management of community funds
- Misappropriation of European funds
Until now, Hungary was not part of the EPPO, which left a gap in direct supervision in a country that receives a significant share of European structural funds. With this decision, the EPPO can act in Hungary with the same investigative powers as in the rest of participating member states, including cross-border coordination with other countries.
Hungary's incorporation is especially relevant given the history of tensions between Budapest and European institutions regarding the use of community funds. The EPPO already operates in most EU member states; Hungary was one of the most notable absences.
Economic and operational impact
For companies operating with European funds in Hungary, the most immediate change is the increased risk of criminal investigation in case of irregularities. The EPPO is not an administrative body: it has the capacity to initiate criminal proceedings, coordinate with national prosecutors, and act cross-border.
| Aspect | Before Decision 2026/1701 | After Decision 2026/1701 |
|---|---|---|
| Supervision of EU funds in Hungary | Hungarian national bodies and OLAF (without direct prosecution power) | EPPO with direct jurisdiction and criminal prosecution power |
| Cross-border investigation | Limited, dependent on bilateral cooperation | Direct EPPO coordination between member states |
| Risk for companies with irregularities | Administrative proceedings and fund recovery | Criminal proceedings, active investigation, formal prosecution |
| Homogeneity of EU control framework | Hungary outside EPPO perimeter | Hungary integrated into EPPO perimeter |
For companies operating correctly, this change actually represents an opportunity: a safer and more predictable environment in Hungary, with less risk of unfair competition from actors operating in gray areas of supervision.
Who does it affect?
- Spanish companies with joint projects in Hungary financed wholly or partially with European funds (ERDF, ESF, Cohesion Fund, Horizon, etc.)
- Hungarian entities benefiting from structural funds that are partners or contractors of Spanish companies or other member states
- Managers and administrators of European consortia with Hungarian participation
- Auditors and advisors working on co-financed projects with presence in Hungary
- EU institutions and bodies financing projects in Hungary
- CFOs and financial directors of business groups with Hungarian subsidiaries or partners in European projects
Practical example
A Spanish infrastructure company participates as lead partner in a European consortium executing a project co-financed with ERDF funds in Hungary. Until July 10, 2026, if a suspicion of irregularity arose in the Hungarian part of the project, the investigation depended on Hungarian national bodies and, where applicable, OLAF, which has no direct criminal prosecution power.
From the entry into force of Decision 2026/1701, the EPPO can initiate a criminal investigation directly against any consortium participant, including the Spanish company in its capacity as lead partner, if there are indications of fraud or misappropriation in the management of funds. The investigation can be coordinated simultaneously in Spain and Hungary without the need for complex bilateral cooperation procedures.
This means that the level of due diligence required of partners in European projects in Hungary is now equivalent to that of the rest of EPPO member states.
What should companies do now?
- Audit active projects with EU funds in Hungary: Review supporting documentation, contracts with Hungarian partners, and internal control procedures to identify potential vulnerabilities before the EPPO does.
- Strengthen due diligence controls over Hungarian partners: Require Hungarian partners and contractors to meet the same compliance and documentary traceability standards as other European partners.
- Update European fund management protocols: Ensure that internal procedures for controlling grants and structural funds expressly contemplate EPPO jurisdiction in Hungary.
- Inform project and finance teams: Those responsible for European projects with Hungarian participation must understand that the supervision framework has changed and that the consequences of irregularities are now criminal in nature, not merely administrative.
- Consult with specialized legal advisors: If there are doubts about the correct justification of expenses or the eligibility of certain items in projects with a Hungarian component, now is the time to resolve them proactively.
Frequently asked questions
What is the EPPO and what can it investigate in Hungary?
The European Public Prosecutor's Office (EPPO) is the independent EU body competent to investigate and criminally prosecute crimes against European financial interests. In Hungary, from July 10, 2026, it can investigate fraud in structural funds, corruption, and misappropriation of community funds, with direct criminal prosecution capacity and cross-border coordination with other member states.
Does this decision affect Spanish companies with projects in Hungary?
Yes. Spanish companies participating in joint projects in Hungary financed with EU funds now fall under a more robust supervision framework. The EPPO can investigate all participants in a consortium, including partners from other member states, if there are indications of fraud or irregularities in the management of European funds.
When does Hungary's incorporation into the EPPO take effect?
Commission Decision 2026/1701 entered into force on July 10, 2026, although it was published in the EU Official Journal on July 13, 2026.
What is the difference between previous supervision and the EPPO?
Before this decision, supervision of EU funds in Hungary depended on Hungarian national bodies and OLAF, which has no direct criminal prosecution power. With the EPPO, there is a supranational body with the capacity to initiate criminal proceedings, coordinate cross-border investigations, and bring cases directly to court.
What should companies that already have active projects with EU funds in Hungary review?
They should audit the supporting documentation of expenses, contracts with Hungarian partners, and internal control procedures. They should also ensure that the due diligence standards applied to Hungarian partners are equivalent to those of other European partners, since the EPPO can investigate all participants in a co-financed project.
Official source
Consult full regulation at official source
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://eur-lex.europa.eu/./legal-content/AUTO/?uri=OJ:L_202601701