Hungary-Vatican concordat on finance (1997): text
This concordat was the best financial package that the Vatican could get from the Socialist government. In fact later, when Hungary ran into financial difficulties, the payments to the Vatican became a hardship. However, four years later the conservative government amended this concordat to give the Vatican an even better deal.
Financial agreements were made with other churches, but unlike a concordat, they have no international standing. The state funding guaranteed to Catholic universities and colleges in this concordat is combined with their freedom under Hungarian law to set their own fees. Another financial advantage is the fixed rate of interest that the state is locked into paying to the Church (II, 2.3). Until 42 billion forints have been paid off, the Church is to receive what is now a very favourable interest rate of 5%.
This concordat contains an escape clause (Chapter IV. art. 3) but this turned out to be meant only for the Church. When the Hungarian government tried to argue that its financial circumstances had "changed radically", making "modifications necessary", the Vatican blocked its attempt to renegotiate this. See Failed attempt to renegotiate the finance concordat.
However, in 2010 an authoritarian government came to power which enshrined Vatican doctrine in the new constitution. This and the new law on religions were considered to justify revising the concordat and the Vatican took advantage of the favourable political climate to negotiate an amendment. See Summary of amended Hungary-Vatican concordat, 2013.
Agreement between the Holy See
and the Republic of Hungary
on the financing of public service and other particular religious activities undertaken in Hungary by the Catholic Church and on some issues of property ownership.
Signed on 20th June 1997
[Passed in parliament as Act LXX of 1999]
With reference to the Agreement on the resumption of diplomatic relations signed in Budapest on 9th February 1990, according to which the Holy See and the Republic of Hungary (hereafter: the Parties) had decided to resolve, in the future and by mutual agreement, certain issues of common interest. The Parties, being desirous of finding a lasting solution for the financing of activities of a public service or religious nature carried out in Hungary by the Catholic Church (hereafter: the Church), likewise indeed for some issues concerning ownership and taking into account the law on freedom of conscience, religion and the Church (Law No IV, 1990) as well as the law on the settlement of the status of ownership of former Church buildings (Law No XXXII, 1991), have agreed the following:
The financing of the Church’s public service activities (as provided for in Law No IV, 1990) will be governed by the general rules for State institutions contained in the same law, in conjunction with the provisions of this Agreement.
The Church will receive financial subsidies for the educational establishments managed by it (infants’, primary, secondary and boarding schools) equal to those accorded to State and local operators of similar establishments.
- For non-theology students on all courses admitted before 1st September 1997 to University and Higher Education institutions, the Church will receive the “Standard” education subsidy (given in law) and the student levy at the same level as are paid for those with the same legal status at Higher Education institutions run by the State. For students receiving State subsidies after 1st September 1997, the same “Standard” education subsidy and student levy (as well as all the other levies) will be paid exactly as allocated to State institutions according to the Higher Education Law. Equal treatment will also apply to centralised subsidies for higher education assigned on the basis of competitions. In these higher education institutions, the proportion of State-subsidised student places on each course after 1st September 1997 cannot be lower than the proportion of these students enrolled on the first course of the year 1997 with respect to the total number of students subsidised by the State. The Parties will reassess the situation at the end of five successive academic years from the date of the present Agreement coming into force.
- The State guarantees at least 50% of the “Standard” education subsidy for the maintenance of higher education institutions and boarding schools.
- The Hungarian State will ensure that all State-subsidised students at University and Higher Education Institutions receive the same benefits, in equal measure, and based on an equal legal footing, including with regard to the housing subsidy, as those State-subsidised students at State-run Higher Education Institutions.
- The same principles apply to “accredited” Higher Education Institutions which provide education connected to religious activities (e.g. theology etc.) of which a definitive list appears in Appendix 1 of this Agreement, with the following particularities:
a) As for determining subsidies for University-level institutions, the standard amount will be that paid to the Arts Faculty and, in Higher Education colleges, that paid to the Classics Department of a College of Education.
b) The State guarantees funding for all of these institutions and for all of their students. The total number of places funded by the State shall not exceed 2500 per annum.
c) The funding of any new institutions will be determined by separate agreement between the competent State authority and the Hungarian Episcopal Conference.
- The Church’s cultural property and, specifically, any objects of value and documents held in its archives, libraries and museums and in other collections, constitute an important part of Hungary’s entire cultural heritage. The Church and the Hungarian State undertake to work together to safeguard such heritage, increase its value and facilitate enjoyment of it.
- The Hungarian State will contribute to the restoration and safeguard of the relics of religious cultural property, monumental structures and works of art in the possession of Church bodies and institutions on an equal basis to similar property owned by the State. It will equally contribute to the running of Libraries and Archives belonging to Church bodies and institutions.
This last contribution will be calculated on the basis of the amount contributed in 1997, always taking into account any budget flexibility and works to be undertaken.
- In order to apply the principles contained in points 1 and 2 above, especially given any with particularities of a religious nature, the competent State authorities and the Hungarian Episcopal Conference will come to an appropriate agreement.
The Hungarian State recognises the requirement to hand over the ex-Church properties listed in Appendix 2 of this Agreement.
The State will transfer property to Church ownership according to the provisions of the Law on Settlement of Ownership Status of ex-Church Property (Law XXXII of 1991) during the period between 1998 and 2011, with annual quotas of equal size.
- As a partial application of the Law mentioned in Chapter II, Article 1 above, the Hungarian State will convert the value of property not listed in Appendix 2 into a fund payable to the Church for religious worship activities (non-public-service activities).
- The Hungarian State considers this financial compensation to be a long-term investment, the value of which will be reviewed according to the mean devaluation of the forint, measured against a foreign exchange basket, as recorded in the budget. The degree of reevaluation must be based exactly on the real devaluation figure current following the adoption of the Budget Act.
- The income payments will be set at 5% of the total sum of financial compensation being the expectable yield of long-term foreign exchange investments. This income shall be increased in such a way that starting from 1998 it will be 4.5% increasing to 5% from 2001. The starting amount of income for 1997 to be paid to the Church will be 1890 million forints (HUF), based on a compensation sum of 42 billion forints.
On commencement of the current Agreement, the Catholic Church considers the requirements for compensation in settlement of property to be satisfied, based on Law XXXII of 1991.
- From 1st January 1998, the Hungarian State will ensure that each person may legally apportion 1% of their Personal Income Tax Contributions to the Church of their choice or to a special State fund.
- The Hungarian State guarantees to give the Church 0.5% of Personal Income Tax Contributions (IRPEF) from the previous year up to 2001, in such a way that, if the sum declared by contributing citizens shall be less than the specified amount, the difference shall be made up by the Hungarian State. Any such differential sum shall be attributed to the various Churches proportionally according to the choice made by those citizens who so indicated. However, the sum to be paid to the Catholic Church shall not be less than 1700 million forints. In 2001, the Parties will re-examine the conditions of the abovementioned source of income. (See the Supplementary Protocol for an explanation of IRPEF.)
- The Hungarian State shall continue, whenever possible, to pay additional subsidies for clearly-defined projects as may be indicated by the Hungarian Episcopal Conference.
- The various benefits or exemptions in respect of either Personal Income Tax or Corporation Tax (for businesses controlled by the Church) which are currently granted by law to the Church, its clergy and its religious activities shall not be reduced without the consent of the Church.
The Church has the right to further State subsidies based on the public’s decision to avail itself of public services provided by the Church. Any such subsidy shall ensure that the Church organisation which administers such services will be subsidised to the same degree as a State or local government service organisation, in accordance with Law IV of 1990. (The calculation method for this type of subsidy is contained in the Supplementary Protocol).
The Appendices 1 and 2 mentioned in Chapter I Art. 3 Sect. 4 and in Chapter II Art. 1 as well as the Supplementary Protocol mentioned in Chapter 2 Art. 4 Sect. 2 and Chapter III shall constitute an integral part of this Agreement and, with it, shall form a single entity.
- Should any differences in interpretation or application of the provisions of this Agreement arise, the Parties shall resolve them by common accord.
- This Agreement shall be ratified according to the Parties’ own rules and procedures and will come into force at the very moment the instruments of ratification are exchanged, and this will be done as soon as possible.
- If one of the Parties shall consider that the circumstances in which this Agreement was made have changed radically, in so far as that Party considers modifications necessary, that Party shall initiate negotiations for amending the Agreement as soon as possible.
Signed at the Vatican City on 20th June 1997 in two original copies, each of which is written in Italian and Hungarian and both of equal authenticity.
to the Agreement between the Holy See and the Republic of Hungary
on the financing of public service activities and other particular religious activities undertaken in Hungary by the Catholic Church and on some issues of property ownership.
Adjunct to Chapter II, Article 4:
IRPEF is the sum which remains after having deducted any rebates or allowances from the tax levied on the entire taxable income.
Adjunct to Chapter III:
- To calculate this subsidy within the framework of budgetary projections for each year, based on data being recorded separately for public education and for social welfare, the institution’s own receipts must be deducted from its restoration and operating costs. The proportion constituting the “Standard” subsidy shall be based on the sum which remains;
complementary subsidies shall be determined in the same fashion. Special subsidies obtained by Church administrators on the basis of competitions can be deducted from the amount of complementary subsidy calculated as above, as is the case for local government institutions.
- Any such subsidies must be calculated according to the number of students enrolled at those Church schools which appear in the province’s Public Education Development Plan; this number should then be used as an average on which to base a forecast of student numbers in the given year.
- Any difference between the calculated figures and real numbers of students will be rectified after consultation with the competent Church administrator.
- The government shall also guarantee the Church receives salary increases for its employees in public education and social welfare, under the same conditions as for local government.
- After verification of these conditions, all existing public education contracts with local governments or with the State or any other contracts of a similar nature will terminate.