CUSTOMER INFORMATION
ON THE HUNGARIAN SHARE OF ORIGIN
AND FOREIGN CONTENT
(specifically regarding local costs)
The Hungarian Export Import Bank Plc. (hereinafter: “Eximbank”), in accordance with the
Hungarian statutory provisions and international rules (in particular, the OECD Arrangement on
Officially Supported Export Credits, TAD/PG(2011)4; hereinafter: “OECD Arrangement”),
provides medium and long-term loans with budgetary interest support (interest equalisation),
while the Hungarian Export Credit Insurance Plc. (hereinafter: “MEHIB”) provides export
credit insurance, with a budgetary payment guarantee, to cover non-marketable risks.
In what follows we provide information about the conditions that an export transaction has to
fulfil in order to be eligible for such loans and risk commitments in terms of the minimum
Hungarian share of origin, and the highest local cost that may be financed.
1.
Legislative background to the regulation of the Hungarian share of origin and
foreign content
Eximbank and MEHIB regard the following regulations as authoritative in relation to the foreign
and Hungarian content of export transactions:
 the OECD Arrangement,
 Government Decree 85/1998 (V. 6.) on the Interest Equalisation System of the Hungarian
Export-Import Bank, and Government Decree 435/2012. (XII. 29.) on the Guarantees
Assumed by the Hungarian Export-Import Bank . with a State Payment Guarantee and on
the Conditions and Detailed Regulations of the Replacement and Interest Costs of Foreign
Currency and Interest Swap Transactions (hereinafter together: “Exim Government
Decree”),
 Government Decree 312/2001 (XII. 28.) on the Terms of the Insurance of NonMarketable Risks by Magyar Exporthitel Biztosító Részvénytársaság with a Government
Payment Guarantee Provided from the Central Budget (hereinafter: “MEHIB
Government Decree”).
2.
Main requirements relating to Hungarian content
The requirements relating to the minimum proportion of Hungarian content are regulated by the
Exim Government Decree and the MEHIB Government Decree, as follows:
1
a. With respect to determining and certifying the Hungarian origin of goods, the provisions of
Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No 2913/92 establishing the Community
Customs Code, the provisions of section 19 of Act CXXVI of 2003 on the Implementation of
Community Customs Law, and the provisions of section 23 of Ministry of Finance (PM)
Decree 15/2004. (IV. 5.) on the Detailed Rules for the Implementation of Community
Customs Law must be applied, with the provision that the business entity engaged in foreign
trade activity is required to obtain the certificate of origin from the Chamber of Commerce’s
body authorised to issue it, and to submit it to Eximbank in the case of refinancing, and to
MEHIB in the case of insurance. In section 5 (“Comments”) of the certificate of origin, the
party requesting the document must indicate the following, depending on whether the
application relates to Eximbank or to MEHIB: “For an application for an Eximbank interest
equalisation loan or cash loan”, or “For a MEHIB insurance application”.
b. The Hungarian content of the service – based on an examination of wage contributions paid
in Hungary in respect of employees employed by the domestic business entity providing the
service, or by a subcontractor thereof that is classed as a domestic business entity, and of the
tools used in the course of providing the service – is determined by Eximbank and MEHIB
and verified by them in accordance with the procedure specified in their internal regulations.
c. At least a quarter of the value, less financing costs, of a construction or assembly general
contractor’s agreement executed by the domestic business entity, or the contract for the
performance of services directly related to the construction, must qualify as an export of
Hungarian origin, regarding which the Hungarian Chamber of Commerce and Industry issues
a certificate of origin. If the Hungarian share of origin is smaller than that prescribed in this
paragraph, Eximbank’s financing may only extend to export credit for the Hungarian share of
origin, and MEHIB’s assumption of risk – except in the case of the provision of cover in the
national interest – may only extend to the Hungarian share of origin. Partial performance is
deemed accepted if the Hungarian share of origin at the time of partial performance complies
with the Hungarian share of origin predetermined in the implementation schedule or
insurance policy.
d. At MEHIB, in the case of a Hungarian share of origin lower than that determined in point c.)
– which, however, may not be lower than half of the proportion determined in point c.) –, the
full credit amount may be insured if the completion of the export transaction is in the national
interest. The approval of insurance transactions representing the provision of cover in the
national interest is performed by MEHIB’s Board of Directors. MEHIB sets forth in its
Business Regulations, and reviews at least once a year, the criteria for determining whether a
transaction is in the national interest, and the procedural rules and documentation
requirements for the certification thereof.
e. In the case of the insurance of domestic supplier’s credit facilities and claims originating
therefrom, the supplier is required, for the purpose of certifying the origin of the goods, to
submit to Eximbank or MEHIB the certificate of origin, obtained from the Chamber of
Commerce’s body authorised to issue it, and to attach the exporter’s declaration to the effect
that the exporter is exporting goods that have been supplied by the supplier, or other goods
made using them.
f. Export investment credit may be provided by Eximbank, and the resulting receivable may be
insured by MEHIB, if the investment made using the credit will generate export sales revenue,
and if the debtor/insured declares that it will use the investment credit to carry out an
2
investment that facilitates the manufacturing and exporting of goods originating from
Hungary, or the provision of services originating from Hungary, and the exporting of such
services, in an amount that at least equals the amount of the export investment credit. For the
purpose of certifying the origin of the goods, the borrower of the export investment credit is
required, at the time of commencing the export, to submit to Eximbank or MEHIB the
certificate of origin obtained from the Chamber of Commerce’s body authorised to issue it.
For certifying and verifying the origin of the service, the provisions set forth in paragraph
(2.b) must be applied.
In accordance with MEHIB’s Business Regulations and the General Contractual Conditions
applicable to the given transaction, for the assessment of a claim the document specified above,
issued by the Chamber of Commerce, must be submitted.
3.
Main requirements relating to foreign content
Under section 2, paragraph (1), point e) of the MEHIB Government Decree, the foreign content is
defined as the products or services supplied or provided by a foreign-domiciled
supplier/subcontractor for the fulfilment of an export-oriented foreign trade contract or general
contractor’s agreement.
Accordingly, the foreign content includes the local costs, as well as the deliveries and subcontractor
performances originating from third countries.
a.
Rules relating to local costs
For the purpose of applying the conditions relating to local costs, as set forth in the OECD
Arrangement, local costs are defined as expenses – related to the purchase of goods and services
– that
 arise in the buyer’s country and are related to the execution of the export transaction,
 are necessary for completing the project of which the export transaction forms a part.
The local costs do not include the commission payable to the exporter’s agent in the buyer’s
country (agent’s commission).
In addition to local costs, the OECD Arrangement also defines the concept of export contract value,
which is the total amount to be paid by the buyer to the exporter for goods and services
constituting the object of the foreign trade contract, not including the local costs.
According to section 10. d) of the OECD Arrangement, supported export credit of up to 30% of
the export contract value, and the export credit insurance related to this, may be provided for
local costs.
The cost of export financing and the export credit insurance may not be regarded as a part of the
Hungarian share of origin.
3
4.
Examination of the local costs related to the export of services, and the examination
of Hungarian origin, performed during the credit appraisal, prior to disbursal and
in the disbursement period
a) Fundamental principles
The Hungarian Chamber of Commerce and Industry (MKIK) has the authority to issue
certificates of origin.
To ensure that the transaction’s compliance with the requirements relating to Hungarian content
and local costs can be verified during the bank’s credit appraisal and the insurer’s risk-assumption
decision, the exporter must corroborate the expected composition of the general contractor’s
agreement (Hungarian and third-country content, and local costs) by including a budget in the
credit application, giving a preliminary indication of the subcontractors expected to collaborate in
performance, the work processes to be performed by them and the cost requirement of these, the
planned deliveries of goods (in an itemised list, giving the expected values of the goods), the
expected suppliers, the Hungarian share-of-origin partial performances, and the arising local
costs.
With respect to fulfilment of the Hungarian share of origin, the object of the examination is the
actual subcontractor level. Items that may not be taken into consideration for the purpose of
determining the Hungarian share of origin – that is, items that must be deducted from the total
performance – are the performances of foreign subcontractors (except Hungarian goods
exported by them, or the performances of Hungarian subcontractors engaged by them).
The company performing the actual service in accordance with the final (contracted) budget, and
designated as a Hungarian subcontractor, is required to declare in writing whether local or thirdcountry subcontractors are involved in the performance of the service.
The basis for the examination of the local costs is provided by the General Contractor’s written
declaration.
b) Preliminary evaluation
With respect to the Hungarian share of origin and the local costs, the preliminary evaluation is
usually performed by Eximbank’s technical expert.
Based on the proposal compiled by the technical expert, Eximbank assesses whether the export
transaction, with respect to the local costs, fulfils the requirements prescribed in the OECD
Arrangement and the rules of the Exim and MEHIB Government Decrees relating to Hungarian
origin. The expert also states an opinion on whether the project can realistically be implemented
with the resource allocation and composition indicated in the budget.
Eximbank and MEHIB, for the purpose of performing the preliminary evaluation (especially for
high-value transactions), reserve the right to designate an independent technical expert.
4
c) Inspections during implementation
Eximbank has inspections performed by its technical expert or by an independent technical
expert engaged by Eximbank, as an integral part of the implementation and disbursement
process, in order to confirm that the Hungarian share of origin stipulated in the contract is
actually being fulfilled. The frequency of inspections by the technical expert, and the specific
times of the individual inspections, are subject to an agreement between the parties.
Prior to disbursement by Eximbank and the provision of cover by MEHIB, the technical expert
is entitled to check, on the premises if necessary, the extent of the Hungarian share of origin that
is actually being achieved.
If the Hungarian content determined in the course of the technical expert’s assessment falls short
of the extent, or behind the schedule determined in the contract, Eximbank may suspend
disbursement of the loan, on the basis of prior consultation with MEHIB, for as long as the
Hungarian content requirement is not fulfilled in accordance with the contractual terms and the
statutory expectations.
5