Orbán cabinet: New golden age may dawn in American-Hungarian relations
American and Hungarian relations must be placed on a new foundation, a new golden age in bilateral relations may dawn, National Economy Minister Márton Nagy said in a post on social media on Monday.
Changes in American-Hungarian relations
Nagy said the government is eagerly awaiting the start of Donald Trump‘s presidential term. The government expects the new presidential term to bring an end to the Russian-Ukrainian war and that peace would mean physical and economic security and confidence for families and businesses, which could lead to increased consumption and investment.
The minister said the government sees four main areas for the rebuilding of relations, including restoring an agreement to avoid double taxation, easing visa rules, restarting direct flights between Budapest and the most important American cities like New York and Washington and achieving that the US is once again among the top three investors in Hungary. Nagy added that the Hungarian government is also awaiting the new American ambassador as “revenge and scheming” must come to an end.
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Again the US-Hungary double tax treaty comes up …
Now for some context: The old 1979 Treaty (which was terminated by the US) did not have a limitation on benefits (LOB) treaty shopping clause, which by itself would be a reason to terminate. An LOB clause prevents multinational corporations from strategically directing business to a jurisdiction with the intention to take advantage of lower withholding tax rates provided by a tax treaty (i.e. prone to abuse – call it “tax planning” if you will).
The termination actually came about after our Politicians tried to prevent the 15 percent Global Minimum Tax scheme for multinational corporations from moving forward… As one of eight out of 140 OECD Member countries (please remember – Hungary always knows best!). By then, the US Treasury had enough and pulled the emergency brake.
The “new” Treaty, negotiated in 2010, which included an LOB provision, was never ratified due to the efforts of Senator Rand Paul, a staunch Kentucky Republican. So blaming the current US Administration sort of misses the mark.