Hungary is open to a new Hungarian-US agreement to avoid double taxation

Mihaly Varga noted after the US-Hungarian Business Council (USHBC) meeting that the Hungarian government’s goal is to provide a safe and competitive economic environment for taxpayers, and therefore it strives to strengthen US-Hungarian tax cooperation. The Minister of Finance stressed that the consequences of terminating the previous agreement by the American side are not in the interest of the two countries.

Speaking about the relations between the two countries, the minister said:

Its share of the total investment portfolio is close to 9 percent. So far, the Hungarian government has concluded strategic cooperation agreements with 94 companies, including 14 American companies. next to

• 1,700 American companies
• It employs approximately 107,000 people,
• The volume of bilateral trade will increase from 7.1 to 8.3 billion dollars in 2022, or by 16 percent.

Thus the record for binary trade was broken.

The American-Hungarian Business Council, founded in New York in 2016, organized a US-Hungarian economic summit this year, aimed at bringing new investors to our country in addition to existing investors.

What does termination of a double taxation agreement mean?

On July 8, 2022, the United States notified Hungary through diplomatic channels that it would unilaterally terminate the double taxation agreement between the United States and Hungary. However, its tax assessment provisions can still be applied until December 31, 2023.

To withhold tax income For amounts paid or credited on or after January 1, 2024, and for other taxes, the provisions of the Agreement will expire for tax periods beginning on or after January 1, 2024.

All this a Personal income tax From this point of view, this means that from 1 January 2024, both countries will be entitled to tax income from abroad based on their own legislation, and income from the USA must be treated as income from a non-treaty country.

Corporate tax In the case of a specified date, income resulting from transactions between the US and Hungarian parties must also be treated as if it came from a non-treaty country. Therefore, the United States can deduct withholding tax at the rate in accordance with its domestic rules from U.S. withholding tax income (for example, dividends and interest).