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The EU's top court finds that the reforms breached EU values on a number of levels and broke the founding values of the EU treaty.
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The laws were brought in by Viktor Orbán's government in 2021 and banned so-called promotion of homosexuality or gender change to under-18s, arguing it violated child protection laws.
The European Court of Justice ruled that the Orbán reforms breached EU rules on a number of levels, and significantly that it also broke the founding values of Article 2 of the EU Treaty - an unprecedented finding.
The ruling comes nine days after Hungarians voted to end Orbán's 16-year era of continuous rule.
The ECJ ruled that the Hungarian law interfered with rights such as a ban on discrimination based on sex and sexual orientation, respect for private and family life and freedom of expression and information.
The law also stigmatised and marginalised people who were transgender or not heterosexual and associated them with people convicted of paedophilia, the court found.
The Hungarian law was "contrary to the very identity of the Union as a common legal order in a society in which pluralism prevails", it ruled.
John Morijn, professor of law and politics in international relations at the University of Groningen in the Netherlands, said the Court's ruling was historic in its symbolism, in that it meant the rights of a group in society could not be negotiated away.
"You cannot equate what is totally natural - that 10% of the population loves the same sex - with egregious crime," he told the BBC.
Orbán's Fidesz party was able to push through the legislation with the help of a supermajority - with control of two-thirds of parliament.
Last year, it passed a further amendment that enabled a ban on public events involving the LGBTQ community such as Budapest's popular Pride march, which went ahead despite the ban, prompting prosecutors to file charges against Mayor Gergely Karácsony.
The European Commission said
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